UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT TO FORM 10-Q
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-19365
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CROWN ENERGY CORPORATION
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(Exact name of registrant as specified in its charter)
Utah 87-0368981
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(State or other jurisdiction of (I.R.S.Employer Identification No.)
incorporation or organization)
215 South State, Suite 550, Salt Lake City, Utah, 84111
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(Address of principal executive offices, zip code)
(801) 537-5610
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(Registrant's telephone number, including area code)
Not applicable
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
There were 12,668,512 shares of $.02 par value common stock outstanding as of
November 13, 1998.
<PAGE>
The purpose of this Amendment is to add an electronic copy of exhibits
previously filed in paper under Form SE pursuant to a temporary hardship
exemption.
ITEM 6. Exhibits and Reports on Form 8-K
Exhibit Name
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10.1 Purchase and Sale Agreement dated July 2, 1998
between Petro Source and Crown Asphalt Distribution*
10.2 Saba Petroleum Processing Agreement for Santa Maria
Refinery in California dated May 1, 1997 between
Petro Source Refining Corporation and Santa Maria
Refining Company and Saba Petroleum Company, which
was assigned to the Company on or about July 2,
1998
10.3 MetLife Equipment Lease dated May 1, 1997 between
Petro Source Refining Corporation and MetLife Capital
Corporation, which was assigned to the Company on or
about July 2, 1998
10.4 PacifiCorp Property Lease dated April 1, 1996 between
Petro Source Refining Corporation and PacifiCorp,
which was assigned to the company on or about July
2, 1998
10.5 GATX Rail Car Lease dated December 10, 1987 between
Petro Source Corporation and General American
Transportation Corporation, which was assigned to the
Company on or about July 2, 1998
10.6 Office Space Lease
27 Financial Data Schedule**
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*Incorporated by reference from the Company's Form 8-K filed with the
Commission on or about July 17, 1998, bearing commission file number
0-19365.
**Incorporated by reference from the Company's Form 10-Q filed with the
Commission on or about November 16, 1998, bearing commission file
number 0-19365.
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The Company filed a Form 8-K on June 8, 1998, to report a change in
auditors. The Company also filed a Form 8-K on July 17, 1998, to report
the acquisition of the inventory and assets of Petro Source Asphalt
Company.
<PAGE>
PART III. - SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CROWN ENERGY CORPORATION
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(Registrant)
Date: November 24, 1998 By: /s/ JAY MEALEY
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Jay Mealey, President
Date: November 24, 1998 By: /s/ RICHARD S. RAWDIN
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Richard S. Rawdin, Vice President of Finance
[Crown Asphalt Products Company Logo]
VIA FEDERAL EXPRESS
October 1, 1998
Mr. Burt M. Cormany
Santa Maria Refining Corporation
1660 Sinton Road
Santa Maria, California 93455
Re: Processing Agreement Renewal
Dear Mr. Cormany:
Reference is made to the Processing Agreement dated May 1, 1995
between Santa Maria Refining Corporation (SMRC), Saba Petroleum
Company and Petro Source Refining Corporation ("the Agreement").
Paragraph 1.a. of the Agreement provides that Petro Source may
request an extension of the term of the Agreement by giving SMRC
written notice at least sixty (60) days prior to the end of the
Primary Term.
As you are aware, Crown Asphalt Distribution l.l.c. (CAD)
purchased all of the asphalt marketing and distribution assets of
Petro Source, including the Agreement, effective July 2, 1998.
CAD's business is managed and operated by Crown Asphalt Products
Company (CAPCO). This letter will serve as a written request that
the Agreement be extended for an additional one year term through
December 31, 1999.
If you have any questions please do not hesitate to contact me.
Sincerely,
Jay Mealey
Manager, Crown Asphalt Distribution l.l.c.
cc: Illyas Chaudhary - Saba Petroleum Company
Bill Kraemer - MCNIC
Lorin Patterson - Ray Quinney & Nebeker
PROCESSING AGREEMENT
This Processing Agreement ("Agreement") is made and entered
into on the 1st day of May, 1995, by and between PETRO
SOURCE REFINING CORPORATION, a Utah corporation ("Petro
Source") and SANTA MARIA REFINING COMPANY, a California
corporation ("SMRC"), and SABA PETROLEUM COMPANY ("SABA") a
Colorado corporation.
R E C I T A L S
WHEREAS, SMRC is the owner and operator of the Santa Maria
Refinery located in Santa Maria, California (the "Refinery"); and
WHEREAS, Petro Source is a marketer of crude oil and
refined products, with access from time to time to certain
volumes of crude oil which it desires that SMRC process at the
Refinery; and
WHEREAS, SMRC desires to process said crude oil on the
terms and conditions herein; and
WHEREAS, SABA is the parent company and sole shareholder of
SMRC and desires to assure Petro Source of SMRC's performance
hereunder; and
WHEREAS, SABA has or controls crude oil production, which
is either available for sale, or could become available for sale,
that SABA desires to sell to Petro Source and Petro Source
desires to purchase from SABA.
NOW THEREFORE in consideration of the mutual promises set
forth herein, and other good and valuable consideration, the
parties hereto agree as follows:
1. Term of The Agreement
a. This Agreement shall be effective as of the 1st day of May,
1995 (the "Effective Date'), and, subject to other provisions
contained herein, shall remain in effect until December 31, 1998
( the "Primary Term"). Petro Source may request, by written
notice given at least sixty (60) days prior to the end of the
Primary Term or any subsequent renewal term, that this Agreement
remain in effect for an additional one (1) year term. If SMRC
denies Petro Source's request for a renewal term at the end of
the Primary Term, and only for the denial of Petro Source's
request for a renewal at the end of the Primary Term, SMRC shall
pay Petro Source, on the date that this Agreement terminates,
$100,000.
b. In the event that this Agreement terminates or expires under
the provisions of paragraph I a. and Petro Source has a
contractual commitment for refined product that had been entered
into prior to the termination or expiration of this Agreement
then, at Petro Source's request, SMRC shall hold the inventory
necessary to fulfill the contractual commitment until Petro
Source requests delivery of such inventory. Petro Source shall
pay, on a monthly basis, SMRC's operating expenses incurred for
handling, storage and delivery of the refined product for the
contractual commitment.
Petro Source understands that SMRC may be required to
relocate the refined product to other tankage for
various reasons. Petro Source's inventory will not
materially limit SMRC's use of the Refinery, however,
SMRC shall not commingle the retained Petro Source
inventory with third party inventories without Petro
Source's prior approval; such approval shall not be
unreasonably withheld.
2. Feedstock Processing
a. Petro Source shall deliver, or caused to be delivered,
Feedstock to SMRC for processing at the Refinery. "Feedstock"
means crude oils or other liquid hydrocarbons of the types listed
in Exhibit "A", attached hereto and incorporated herein, which
may be amended from time to time upon the agreement of the
parties. The amended list of crude oil and other liquid
hydrocarbon types shall be set forth in writing and shall be
incorporated into this Agreement.
b. The amount of Feedstock delivered shall be at Petro Source's
sole discretion. SMRC agrees to process all quantities of
Feedstock delivered by Petro Source for processing, up to the
maximum thruput capability of the Refinery. SMRC agrees to
dedicate 100% of the capacity of the Refinery to the processing
of the Feedstock delivered by Petro Source. The parties
acknowledge that it is the intent of this Agreement to develop
opportunities for Local Sales (defined in paragraph 3) and to
satisfy that intent the parties agree that the asphalt produced
from 50% of the first 90,000 barrels of Feedstock, delivered each
month, shall be allocated to Local Sales ("Allocated Asphalt").
If Petro Source, after reasonable efforts to market the Allocated
Asphalt to Local Sales, and after consulting with SMRC, elects to
market Allocated Asphalt as Export Sales (defined in paragraph
3), then Petro Source may market the Allocated Asphalt as Export
Sales.
3. Processing Fee and Payment Thereof
a. SMRC shall be entitled to a monthly processing fee (the
"Processing Fee") which is the sum of 50% of Local Profit, plus
50% of Export Profit. Notwithstanding the foregoing to the
contrary, SMRC shall receive no portion of the profit from the
sale of Export Sales asphalt products which are modified or
blended with other materials by Petro Source, or its agents,
after the asphalt products are removed from the Refinery.
b. "Local Profit" means Local Sales Revenue less Local Cost(s)
as determined in accordance with generally accepted accounting
principles ("GAAP").
i. "Local Sales Revenues" means, on a process month basis, all
revenue received and retained (i.e., not subject to being
returned due to events such as, but not limited to, offsets,
accounting corrections, settlements and preference actions in
bankruptcy) from Local Sales.
ii. Local Sales" means sales of the following products: (1)
asphalt which was produced at the ' Refinery from Feedstock
supplied by Petro Source and delivered to an application site in
the State of California; (2) asphalt which was processed at the
Refinery from Feedstock supplied by Petro Source and which was
modified by polymiers at the Refinery, regardless of application
location, and (3) a prorated portion of the light products
attributable to the volume of Feedstock from which Local Sales
described in subparagraph (1) and (2) hereof were derived.
iii. "Local Cost(s)" means, the sum of Petro Source's Local
Marketing Cost(s), SMRC Reimbursable Variable Cost(s) (defined in
paragraph 5) allocable to Local Sales, SMRC Reimbursable Fixed
Cost(s) (as defined in paragraph 5), Local Inventory and
Receivable Carrying Cost(s); and Local Cost(s) Carry Forward.
iv. "Petro Source's Local Marketing Cost(s)" means on a process
month basis, all cost(s), losses (including hedging losses net of
gains) and expenses incurred by Petro Source in making related
Local Sales Revenue, including, but not limited to, the direct
out-of-pocket cost(s) of selling, documenting, handling, storing,
developing, testing, transporting and installing product; cost(s)
associated with collection of receivables related to Local Sales
(including, but not limited to, demerits and bad debt), cost(s)
of goods sold, and any environmental excise tax, (including, but
not limited to, Superfund excise tax) on petroleum processing.
The parties hereto acknowledge that in accordance with the
regulations pertaining to the Superfund excise tax that SMRC, as
owner and operator of the Refinery, is required to remit the
Superfund excise tax to the federal government.
v. "Local Inventory and Receivable Carrying Cost(s)" means the
portion of interest, at the rate charged to Petro Source under
its bank credit facility, incurred to purchase and hold inventory
and receivables pending payment; and letters of credit cost(s)
which are reasonably allocable to Local Sales.
vi. If Local Sales Revenue less Local Cost(s) is a negative
number, that number will first be applied as a reduction to
Export Profit and if Export Profit is insufficient to absorb the
entire amount, any remaining amount will be carried forward and
treated as a Local Cost(s) in future months until it is
extinguished or until this Agreement expires or is terminated by
Petro Source ("Local Cost(s) Carry Forward").
c. "Export Profit" means Export Sales Revenue less Export
Cost(s) as determined in accordance with GAAP.
i. "Export Sales Revenue" means, on a process month basis, all
revenue received and retained from Export Sales, less $25 per ton
for each ton of processed asphalt sold. Notwithstanding the
foregoing to the contrary, if Petro Source could have supplied an
Export Sale from another source, with such other source at a
lower cost(s) than the effective cost(s) Petro Source incurs by
supplying such sale with asphalt from the Refinery, such $25
shall be increased by the difference in the cost(s) of the two
sources of supply.
ii. "Export Sales" means sales of the following products: (1)
asphalt which was produced at the Refinery from Feedstock
supplied by Petro Source and delivered to an application site
outside of the State of California, except when such asphalt has
been modified with polymers at the Refinery, and (2) a prorated
portion of the light products attributable to the volume of
Feedstock from which Export Sales described in subparagraph (1)
hereof were derived.
iii. "Export Cost(s)" means, the sum of Petro Source's Export
Marketing Cost(s), SMRC Reimbursable Variable Cost(s) allocable
to Export Sales, Export Inventory and Receivable Carrying Cost(s)
and any Remote Terminal Cost(s).
iv. "Petro Sources Export Marketing Cost(s)" means on a process
month basis, all cost(s), losses (including hedging losses net of
gains) and expenses incurred by Petro Source in making related
Export Sales Revenue, including, but not limited to, the direct
out-of-pocket cost(s) of selling, documenting, handling, storing,
developing, testing, transporting and installing product; cost(s)
associated with collection of receivables related to Export Sales
(including, but not limited to, demerits and bad debt), cost(s)
of goods sold, and any environmental excise tax (including, but
not limited to, Superfund excise tax) on petroleum processing.
v. "Export Inventory and Receivable Carrying Cost(s)" means
portion of interest incurred to purchase and hold inventory and
receivables pending payment; and letters of credit cost(s) which
are reasonably allocable to Export Sales.
vi. "Remote Terminal Cost(s)" means a thruput cost(s) of $15.00
per ton for each ton of asphalt sold as an Export Sale to cover
use of asphalt terminaling facilities of Petro Source and its
affiliates only when such asphalt actually passes through such
terminaling facility. Such Remote Terminal Cost(s) is to be
adjusted for inflation on an annual basis using the percentage
increase in the U.S. Department of Commerce's Consumer Price
Index.
d. Within thirty-five (35) days after the end of a process
month, Petro Source shall provide SMRC a monthly statement (the
"Monthly Statement") identifying Local, Profit, Export Profit,
Local Inventory and Receivable Carrying Cost(s), Export Inventory
and Receivable Carrying Cost(s), Petro Source's Local Marketing
Cost(s) and Petro Source's Export Marketing Cost(s); reflecting
how SMRC's compensation was calculated. Petro Source shall pay
SMRC any Processing Fee due monthly, based upon the Monthly
Statement.
e. Within one hundred twenty (120) days of the date SMRC
receives the Monthly Statement, SMRC shall promptly notify Petro
Source of any dispute with the Monthly Statement or a portion
thereof. After that one hundred twenty (120) days has passed, the
Monthly Statement shall be deemed correct and final as to any
allocation or determination made by Petro Source in the Monthly
Statement's preparation, and SMRC shall have rel6sed and waived
all rights concerning the undisputed portions of the Monthly
Statement concerning such allocations or determinations. Any
errors, omissions or changes in accruals not dependent on Petro
Source's judgment, or any adjustments made by third parties, may
be made at any time within a two (2) year period after the month
of delivery of the Monthly Statement, and all payments are
subject to subsequent adjustment for such items.
4. Reimbursable Cost(s)
a. SMRC shall pay all direct out-of-pocket cost(s) reasonably
and necessarily incurred by SMRC to process Feedstock, which may
be reimbursed by Petro Source (the "Reimbursable Cost(s)"). For
all purposes hereunder, Reimbursable Cost(s) shall not include
capital cost(s), depreciation, amortization, environmental
remediation, administration, management higher than plant
manager, property damage to the refinery, or cost(s), if any,
which are the result of SMRC's or a third party's negligence.
b. "SMRC Reimbursable Variable Cost(s)" means the Variable
Cost(s) incurred by SMRC in carrying out SMRC's obligations under
this Agreement, which have been approved in advance of being
incurred. SMRC Reimbursable Variable Cost(s) shall be allocated
between Local Cost(s) and Export Cost(s) based upon the ratio of
Local Sales asphalt volume and Export Sales asphalt volume to the
total asphalt sales volume. "SMRC Reimbursable Fixed Cost(s)"
means those Reimbursable Cost(s) other than SMRC Reimbursable
Variable Cost(s).
c. SMRC shall prepare and present to Petro Source on the 15th
of each month an estimate of SMRC's Reimbursable Variable Cost(s)
and Reimbursable Fixed Cost(s) to be reasonably and necessarily
incurred by SMRC to process the Feedstock ("Monthly Budget").
Petro Source shall review the Monthly Budget and shall advise
SMRC which items on the Monthly Budget Petro Source agrees to
reimburse pursuant to this Agreement.
d. Petro Source shall prepare and present to SMRC on the 15th
of each month an estimate of Petro Source's Local Marketing
Cost(s) and Petro Source's Export Marketing Cost(s) to be
reasonably and necessarily incurred by Petro Source to acquire
the Feedstock and to market the refined product processed
pursuant to the terms of this Agreement ("Monthly Marketing
Budget"). SMRC and Petro Source shall review the Monthly
Marketing Budget and shall determine jointly which items shall be
accepted as Petro Source's Local Marketing Cost(s) and Petro
Source's Export Marketing Cost(s), for purposes of this
Agreement.
e. SMRC shall submit to Petro Source each Monday a summary of
all Reimbursable Cost(s) which are due, payable, and shall be
paid by SMRC during the following seven days with the associated
documentation of the Reimbursable Cost(s). Petro Source shall
review the summary of Reimbursable Cost(s) and the associated
documentation and if the same is acceptable Petro Source shall
transfer to SMRC, by wire, an amount, as determined by this
Agreement,. equal to the accepted Reimbursable Cost(s).
f. SMRC shall provide Petro Source notice, as soon as
reasonably possible, of any SMRC's Reimbursable Fixed Cost(s)
account (e.g., contract labor, chemicals, etc.) which is expected
to exceed the amount shown for such cost(s) in the Monthly Budget
by more than 10% ("Fixed Cost(s) Over Budget"). Petro Source,
upon review of Fixed Cost(s) Over Budget, shall have the sole
discretion to approve or disapprove the Fixed Cost(s) Over
Budget. Only those Fixed Cost(s) Over Budget which Petro Source
receives notice of and approves shall be subject to reimbursement
by Petro Source under this Agreement.
5. Taxes and Tariffs
SMRC shall be responsible for and pay or cause to be paid
all taxes and tariffs imposed upon SMRC with respect to the
performance by SMRC of its operations and obligations under
this Agreement and Petro Source shall be responsible for and
pay all taxes and tariffs imposed upon Petro Source with
respect to the performance of its operations and obligations
hereunder.
6. Discontinuance of Operations
a. Notwithstanding any provision contained herein to the
contrary, in the event and at any time that Petro Source
determines, in its sole judgment, that it would be more efficient
or economical to discontinue processing Feedstock Petro Source
shall give SMRC ten (10) days written notice to place the
Refinery in a Warm/ldle mode; or, thirty (30) days written notice
to place the Refinery in a Shutdown mode.
b. "Shutdown" means the Refinery is not staffed or operated for
processing any Feedstock, nor is it capable of processing
Feedstock without a delay, and no heat is being supplied to the
asphalt product tanks.
c. "Warm/Idle" means the Refinery is not currently processing
any Feedstock but is staffed and is capable of processing
Feedstock without delay and the asphalt product tanks are kept
hot and available for daylight loading in order to remove
inventory.
d. If Petro Source requests that the Refinery be placed on a
Warm/Idle mode, then Petro Source will pay SMRC the Reimbursable
Cost(s) hereunder during the period the Refinery is in Warm/Idle
mode. If Petro Source requests that the Refinery return to full
operation after being placed on Warm/Idle mode, SMRC shall have
at least ten (10) days to return the Refinery to full operation
after receipt of such notice. During the period in which the
Refinery has been placed on a Warm/Idle mode, liquidation of
inventory shall bear the same processing fee as the operating
mode.
e. If Petro Source requests that the Refinery be placed on a
Shutdown mode, then Petro Source may pay SMRC a flat fee of
$20,000 per month, prorated as necessary from the date of notice,
("Shutdown Fee") to keep this Agreement in force and effect. The
Shutdown Fee shall be due and payable as of the 1st day of the
month following the month in which the request to place the
refinery in Shutdown mode was placed by Petro Source and the
Refinery was actually placed in Shutdown mode. If Petro Source
does not pay the Shutdown Fee, then SMRC shall have the right to
terminate this Agreement. If Petro Source requests that the
Refinery return to full operation after being placed on Shutdown
mode, SMRC shall have at least thirty (30) days to return the
Refinery to full operation after receipt of such notice. During
the time in which the Refinery is in a Shutdown mode, SMRC shall
not be obligated to accept deliveries into the Refinery or be
required to deliver product to Petro Source from the Refinery.
f. If at any time Petro Source determines that the profit
margin for Local Sales on a per barrel basis is less than 75
cents per barrel, but more than 25 cents per barrel, based upon
forecast and estimates provided by SMRC and Petro Source, Petro
Source shall notify SMRC of the estimated profit margin and then
for the period for which the profit calculation is made, SMRC and
Petro Source shall share equally in the risk of the profit
margin. SMRC shall, after receiving a copy of the profit
calculation and notice from Petro Source that the profit margin
is less than 75 cents per barrel but more than 25 cents per
barrel, have three (3) days to reject its shared participation in
the risk of the profit margin for the period for which the.
profit calculation is made. If SMRC rejects participation the
Refinery shall be operated in a Shutdown mode. If SMRC does not
reject the participation, but Petro Source later determines that
the profit margin calculated for the period has fallen below 25
cents per barrel, Petro Source shall notify SMRC of the change in
the estimated profit margin and SMRC shall move the Refinery
operations to the Warm/Idle or Shutdown mode as directed by Petro
Source.
7. Refinery Operations
a. SMRC shall operate the Refinery during the term of this
Agreement in a prudent and workmanlike manner, and in accordance
with generally accepted industry standards. SMRC will provide
the capital necessary to ready the Refinery to a safe and
efficient operating condition. If the parties agree that capital
improvements at the Refinery are mutually advantageous, the
parties will negotiate to amend this Agreement to take into
account the mutually desired capital improvements. All capital
improvements at the Refinery shall remain the property of SMRC,
except and unless, Petro Source elects to pay for the capital
improvement and Petro Source demonstrates that such capital
improvement can be removed without damage to Refinery property.
SMRC shall have the option to purchase all capital improvements
paid for by Petro Source at a mutually agreed upon price.
b. SMRC shall provide laboratory personnel which shall be
responsible for determining daily that products produced and
stored by SMRC for Petro Source under this Agreement comply with
product specifications as identified in Exhibit "B", as amended
from time to time. Should Petro Source desire to amend the
Exhibit "B", by adding a new product specification, Petro Source
shall first provide the specification to SMRC, with data on the
Feedstock Petro Source plans to provide in order to make the
product specified, and SMRC shall have up to fifteen (15) days to
inform Petro Source as to SMRC's ability to produce the requested
products according to the specifications. If SMRC is unable to
produce the requested product according to the specification, it
shall notify Petro Source of such inability and SMRC shall have
no obligation to produce the requested products. If SMRC has
notified Petro Source that it can produce the specification, and
SMRC fails to produce products meeting the specifications in
Exhibit "B", Petro Source shall have the right to terminate this
Agreement upon thirty (30) days written notice. SMRC shall not be
reimbursed for any Reimbursable Cost(s) during any periods in
which it was unable to produce products meeting Exhibit "B"
specifications.
c. SMRC will, at all times, be the operator of and remain in
control of the Refinery. All actions with respect to the
operation of the Refinery shall be undertaken by SMRC. Petro
Source shall in no way operate or control the operation of the
Refinery.
8. Refinery Operation Reports
a. Petro Source and SMRC recognize that Petro Source shall
require certain daily data and information on the performance of
the Refinery and quality and quantity of products produced so
that Petro Source can assess the continuing economic viability of
the processing arrangement contemplated in this Agreement. SMRC
will provide reasonable reports to Petro Source as to SMRC's
operations and production, including an inventory and laboratory
product quality report and other reports which allow Petro Source
to monitor variances from anticipated thruput during a month,
operating difficulties and other changes.
b. As soon as possible after the end of each calendar month,
but in no event later than the 10th day of each month, SMRC shall
prepare and furnish to Petro Source an inventory report for the
preceding month which sets out preceding month's quantity of
Feedstock received from Petro Source and type, quality and
quantity of refined products redelivered to Petro Source, and the
type, quality and quantity of refined products SMRC held in
storage for Petro Source at the end of the preceding month (the
"Inventory Report").
c. Petro Source and SMRC shall develop mutually acceptable
accounting information and documentation procedures which allow
for the administration of this Agreement. These procedures may
include, but not be limited to, the exchange of daily receipt and
delivery tickets, of daily and monthly plant and product
performance data, and of necessary process and technical
information. Petro Source shall supply to SMRC refined products
delivery tickets for SMRC's use in the transfer of refined
products at the Refinery, and these receipt tickets are to be
forwarded to Petro Source on a daily basis. For receipt of
Feedstock at the Delivery Point (defined in paragraph 11), SMRC
shall use SMRC custody transfer tickets.
9. Nominations
On or before the 20th of each month, Petro Source will
notify SMRC in writing of the following: (a) the anticipated
base thruput volume of Feedstock to be run during the
upcoming month; (b) whether the refined product therefrom is
expected to be "Local Sales" or "Export Sales"; and (c) the
anticipated profitability from Local Sales. SMRC understands
that these are estimates and forecasts and that Petro Source
is not warranting that the actual results will be as
forecasted. In a like manner, Petro Source may acquire
Feedstocks and sell products during a month for which such
acquisitions and sales had not been forecasted.
10. Refinery Access
SMRC hereby grants to Petro Source and its representatives
the continuing right of access to the Refinery for the
purpose of (a) reviewing and monitoring SMRC's performance
under this Agreement; (b) taking such security precautions
as Petro Source may deem advisable in an effort to minimize
any potential Feedstock or refined product losses; and (c)
performing any obligations Petro Source may have under the
terms of this Agreement.
11. Feedstock Delivery, Refined Products Re-Delivery and Risk of
Less
a. All deliveries of Feedstock by Petro Source to SMRC
hereunder shall be made at the Delivery Point. "Delivery Point"
means the truck unloading flange at the Refinery or such other
delivery points as may be mutually agreed upon by Petro Source
and SMRC. Petro Source shall have custody and control of the
Feedstock, and shall be responsible for any loss or damage
thereto at all times prior to the passage of such Feedstock
through the Delivery Point at the Refinery. SMRC shall have
custody and control of, and bear all risk of loss for, and damage
by and to the Feedstock delivered by Petro Source hereunder upon
passage of such Feedstock through the Delivery Point. SMRC shall
have custody and control of, and bear all risk of loss for, and
damage by and to the refined products delivered by Petro Source
hereunder upon passage of such refined products through the
Delivery Point.
b. SMRC shall be responsible for any loss of, or damage or
injury to all refined, or partially refined product processed
from the Feedstock until the refined products are redelivered to
Petro Source at the Redelivery Point. "Redelivery Point" means
the outlet flange of the Refinery or such other redelivery point
as may be mutually agreed upon by Petro Source and SMRC. Petro
Source shall have custody and control of the refined products,
and shall be responsible for any loss or damage thereto, after
the passage of such refined products through the Redelivery
Point.
c. Notwithstanding the foregoing to the contrary, the parties
hereto acknowledge and agree that refineries, under normal
operations, experience loss of product due to the refining
process ("loss"). The parties, acknowledge and agree that the
"loss" can be influenced by the composition of feedstocks and the
methods used to process, blend and transport the feedstocks and
finished products. SMRC agrees to incorporate all loss control
procedures mutually acceptable to both parties. Any "loss" of
product or feedstock resulting from normal operations and
mutually accepted loss control procedures shall be shared equally
by both parties. SMRC shall be responsible for loss of feedstock
or finished product resulting from negligence or failure to
follow mutually acceptable loss control procedures. SMRC shall
submit to Petro Source by the 5th day of each calendar quarter,
commencing after the first full calendar quarter that this
Agreement is in effect, a report showing loss for the quarter.
SMRC shall within ten (10) days of the report, remit to Petro
Source a sum equal to the volume of loss due to negligence or
failure to follow mutually acceptable loss control procedures
times the weighted average feedstock cost(s) for the calendar
quarter.
12. Title to Feedstock, Plant Fill and Refined Products
Inventory
Petro Source shall at all times retain full and complete
title and ownership of all of the Feedstock, Plant Fill and
refined products processed from Feedstock delivered
hereunder. SMRC will return to Petro Source such Feedstock,
Plant Fill and/or the refined product upon demand, without
right of set off. "Plant Fill" means inventory contained in
the process unit, process piping and tank bottoms.
13. Current Refinery Inventory
SMRC shall provide a gauge sheet which shall set forth a
description of the quantity tank heel level as of the
effective date of this Agreement. This gauge sheet shall be
attached hereto as Exhibit "C" and incorporated herein for
all purposes. Petro Source shall purchase the tank heels
shown in Exhibit "C" for $1 per barrel. At the expiration of
this Agreement and after Petro Source has removed all of its
inventory from the tanks located at the Refinery SMRC shall
purchase such quantity at $1 per barrel.
14. Representations and Warranties of Petro Source
Petro Source represents and warrants with respect to the
Feedstock delivered to the Refinery hereunder, that such
Feedstock is of a type set forth in Exhibit "A" attached
hereto, including any amendments thereto. EXCEPT AS
PROVIDED BY THE FOREGOING, PETRO SOURCE DOES NOT MAKE ANY
REPRESENTATION OR WARRANTY, EXPRESSED OR IMPLIED, WITH
RESPECT TO THE FEEDSTOCK DELIVERED, INCLUDING WITHOUT
LIMITATION, ANY WARRANTY AS TO FITNESS FOR A PARTICULAR
PURPOSE. SMRC shall have the right to reject any Feedstock
which it deems unsuitable due to refinery designs and
operating parameters, except where the Feedstock is of a
type set forth in Exhibit "A", however, all Feedstock
accepted by SMRC for processing shall be deemed to be of a
type set forth in Exhibit "A." Acceptance for processing
occurs when SMRC accepts delivery of the Feedstock at the
Delivery Point.
15. Representation and Warranties of Petro Source
a. SMRC represents and warrants to Petro Source that it has
operated and shall continue to operate the Refinery throughout
the term of this Agreement in a prudent, workmanlike manner in
accordance with generally accepted industry standards and in
compliance with all applicable federal, state and local laws,
rules, regulations and requirements, including, without
limitation, all federal, state and local laws; rules, regulations
and requirements.
b. SMRC represents and warrants that SMRC has, at its own
expense, repaired and otherwise brought the Refinery to a state
of operational readiness so that it can safely and efficiently
process the Feedstock.
c. SMRC represents and warrants that SMRC will hire, supervise,
and maintain a qualified staff of refinery operators, and will
operate the facility in a workmanlike, safe and economic manner
to refine Feedstock delivered to the refinery by Petro Source.
d. SMRC represents and warrants that all Feedstock accepted by
SMRC for processing can be processed within the Refinery's design
and operating parameters.
e. SMRC represents and warrants that it will not (1) allow
either feedstock or refined products, owned by SMRC or third
parties, to be stored at the Refinery; (2) commingle Petro
Source's Feedstock or refined product inventory with any
inventory owned by SMRC or third parties; and (3) allow liens or
other encumbrances, other than those liens shown in Exhibit "U',
attached hereto and incorporated herein, to become affixed either
to Petro Source's Feedstock or refined product inventory.
f. SMRC represents and warrants that (1) SMRC is the lawful
owner of and has good and indefeasible title to the Refinery and
has the full right and authority to operate the same; (2) no
litigation is pending or, to the knowledge of SMRC, threatened,
wherein a claim of title is asserted to the Refinery adverse to
SMRC's title to the same; (3) all taxes assessed against the
Refinery and all liabilities incurred by SMRC have been paid; (4)
there are no liens or security interests, other than those liens
and security interests represented in Exhibit "D" hereto, of any
nature encumbering the Refinery; and (5) that no additional liens
or security interests shall be permitted without the express
written consent of Petro Source.
16. Indemnity and Insurance
a. SMRC shall be responsible for and shall defend, indemnify
and hold harmless Petro Source from and against any and all
claims, demands, losses, judgments, awards, liabilities,
expenses, clean-up orders and cost(s), and suits, whether
groundless or not, from environmental claims, damage, litigation,
penalties, or citations; for bodily injury, sickness, disease or
death; for contamination of, damage to, or destruction of
property (real or personal); and for loss of or damage to natural
resources, resulting directly or indirectly from the ownership
and/or operation of the Refinery by SMRC, whether such claims,
demands, losses, judgments, awards, liabilities, expenses, clean-
up orders and cost'(s), or suits arose before or after the
Effective Date.
b. SMRC agrees to obtain and furnish certificates of insurance
which will evidence to Petro Source public liability insurance
covering the Refinery and SMRCs activities therein contemplated
hereunder with limits of not less than FIVE MILLION AND NO/100
DOLLARS ($5,000,000.00), with respect to bodily injury or death
to any person or persons for any one event or occurrence and not
less than FIVE MILLION AND NO/100 DOLLARS ($5,000,000.00) with
respect to property damage in any one event or occurrence. Petro
Source agrees that the foregoing policy may be in the nature of
blanket coverage including the Refinery as one of several
properties covered thereby.
c. Petro Source shall be responsible for and shall defend,
indemnify and hold harmless SMRC from and against any and all
claims, demands, losses, judgments, awards, liabilities,
expenses, clean-up orders and cost(s), and suits, whether
groundless or not, for bodily injury, sickness, disease or death
resulting solely from acts of negligence, gross negligence, or
willful misconduct on the part of Petro Source, its employees or
agents.
17. Purchases and Sales of SABA Crude
a. SABA shall offer to sell to Petro Source all crude oil
produced in California within a twenty five (25) mile radius of
the Refinery,. which is owned or controlled by SABA which is
either available for sale or could become available for sale upon
notice to third parties. SABA shall provide Petro Source notice
of the availability of such crude oil thirty (30) days prior to
the availability of such for purchase. Whenever there is crude
oil production which is owned or controlled by SABA, such
production is either available for sale, or could become
available for sale with the giving of notice, Petro Source will
have the right, but not the obligation, to purchase such crude
oil.
b. With respect to SABA's heavy crude oil, Petro Source may
purchase such oil at the volumetric weighted average of third
party purchases of similar type and term, at the lease, adjusted
for gravity and quality differentials. If no third party
purchases exist, then the arithmetic average of Texaco, Unocal
and EOTT's posting for crude oil of a similar type and term
adjusted for gravity and quality differentials will be used. Such
purchase of heavy crude oil shall be based upon the terms and
conditions contained in the contract entered into between Petro
Source and SABA attached hereto and incorporated herein as
Exhibit "E."
c. With respect to SABA's light crude oil, Petro Source will
have the right to purchase such crude oil by matching any bona
fide third party offer received by SABA for such production at
the time such production is available for purchase. Petro Source
shall, within twenty (20) days, after receipt of SABA's notice of
a bona fide third party offer for SABA's light crude oil, inform
SABA as to whether Petro Source will exercise its option to
purchase such light crude oil. Such purchase of light crude oil
shall be based upon Petro Source's general terms and conditions.
18. Force Majeure
Each party shall be excused for delay in performance
hereunder when and to the extent that performance is delayed
(a) by any cause reasonably beyond such party's reasonable
control, or (b) by fire, explosion, riots, strikes, labor
disputes, breakdown of machinery or equipment, compliance,
voluntary or involuntary, with any law, order, rule,
regulation, recommendation or request, whether valid or
invalid, of any governmental agency or authority of person
purporting to act thereunder, shortage or failure of the
usual means of transportation of Feedstocks and/or products
to be delivered and/or received hereunder, inability for any
reason to obtain Feedstock and/or materials to be used in
the manufacture, transportation, refining, handling or
storage thereof, low or curtailment of Feedstock production
or loss or failure of product margin or markets.
19. Guaranty
SABA hereby guarantees to Petro Source, all payment and
performance obligations of SMRC hereunder.
20. Confidentiality
SMRC and Petro Source both agree and acknowledge that Petro
Source possesses considerable knowledge and information
about the Feedstock and refined products market which is
confidential and should remain confidential. SMRC agrees to
be bound by the terms contained in the Confidentiality
Agreement which is attached hereto and incorporated herein
as Exhibit "F."
21. Audits
Each party will maintain books and records evidencing their
performance hereunder. Such records shall be retained for at
least two (2) years following the date on which the books or
records are prepared. Upon seven (7) days written notice,
either party shall have the right, at its own expense and
during reasonable business hours, to audit the books and
records of .the other party to the extent necessary to
verify performance hereunder. Prior to commencing such
audit, the auditing party and its representatives shall
agree to maintain the confidentiality of any information
disclosed to the auditor during such audit.
22. Notices
Except as herein otherwise provided, any notice, request,
demand, statement or bill provided for in this Agreement, or
any notice which either party may desire to give to the
other, shall be in writing and shall be considered as duly
delivered when hand delivered or mailed by registered or
Certified Mail, Return Receipt Requested, to the post office
address of the parties hereto, as the case may be, as
follows:
Petro Source: Petro Source Refining Corporation
9801 Westheimer., Suite 900
Houston, Texas 77042
Attention: Harvey H. Cody III
Petro Source Refining Corporation
136 East South Temple, Suite 800
Salt Lake City, Utah 84111
Attention: Brent Stromberg
SMRC: Santa Maria Refining Company
1660 Sinton Road
Santa Maria, California 93455
Attention: Burt M. Cormany
SABA: SABA Petroleum Company
17512 Von Karman
Irving, California 92714
Attention: Ilyas Chaudhary
or to such other address as either party shall designate by
formal written notice.
23. Assignment and Severability
This Agreement shall not be assignable by either party
hereto without the express written consent of the other,
which consent shall not be unreasonably withheld.
Otherwise, the terms and conditions hereof shall extend to
and be binding upon the parties and their respective
successors and assigns. The invalidity or unenforceability
of any provision of this Agreement shall not affect the
validity and enforceability of any other provision, and each
provision of this Agreement shall be enforced to the maximum
extent permitted by applicable law.
24. Choice of Laws, Jurisdiction and Venue
This Agreement shall be governed and construed in accordance
with the laws of the State of California, without regard to
any conflict of laws or provisions which might otherwise
cause another jurisdiction's laws to apply. The exclusive
jurisdiction and venue for any action brought in connection
with this Agreement shall be the state or federal courts
located in Orange County, California.
25. Relationship of Parties
It is not the purpose or intention of this Agreement to
create, and this Agreement should. never be construed as
creating, a joint venture, agency, partnership or other
relationship whereby either of the parties hereto shall be
liable for the acts, either of commission or omission, the
other party hereto.
26. Rules and Regulations
All of the terms and conditions of this Agreement shall be
subject to the applicable laws, statutes, directives,
orders, rules and regulations of all governmental
authorities having jurisdiction hereof.
27. Entirety of Contract
This Agreement contains all the terms and provisions between
the parties concerning the subject matter hereof, and any
prior or contemporaneous agreement or understanding, whether
written or oral, is void. All amendments or changes in this
Agreement shall be made only in writing by duly authorized
representatives of the parties.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day first above written.
PETRO SOURCE REFINING CORPORATION
Name: A. Howard McCollum
Title: Sr. Vice President
SANTA MARIA REFINING COMPANY
Name: Burt M. Corman
Title: President
SABA PETROLEUM COMPANY
Name: Ilyas Chaudhary
Title: President & CEO
[Astec Financial Services, Inc. logo]
Notice of Assignment
December 31, 1997
Mr. Don Pine
Petro Source Refining Corporation
9801 Westheimer, Suite 900
Houston, TX 77042
Re: Transfer of interest in lease
Dear Mr. Pine:
We recently had the opportunity to assist you with financing your company
needs for CEI equipment. In our effort to keep capital balances at a level
to always be able to supply new financing and leasing arrangements to our
customers, we have assigned and transferred your agreement to Metlife Capital
Corporation ("MetLife"). Effective immediately, please notify your insurance
carrier to change the loss payee and additional insured from Astec Financial
Services, Inc. to MetLife, and remit all payments under your lease to the
following address:
MetLife Capital Corporation
P.O. Box 101154
Atlanta, GA 30392
In addition, effective immediately, please direct all correspondence regarding
your lease to the following address:
MetLife Capital Corporation
P.O. Box C-97550
Bellevue, WA 98009
Attn: Vendor Operations
Please note that Astec Financial Services, Inc. has no further right to
modify the terms of your agreement or to waive any requirements set forth in
the agreement.
This assignment procedure allows us to be in a position to offer new financing
or leasing arrangements for your future equipment needs and to always be ready
to serve you quickly and efficently through the credit approval and
documentation process.
Please know that we value your business and look forward to working with you
on future finance arrangements with all the Astec companies.
Sincerely,
Astec Financial Services, Inc.
Albert E. Guth
President
11
MASTER LEASE AGREEMENT
THIS MASTER LEASE AGREEMENT, dated as of
_______________________ ("Agreement"), between Astec Financial
Services, Inc., with an office at 6400 Lee Highway, Suite 107,
Chattanooga, TN 37421 (hereinafter called, together with its
successors and assigns, if any, "Lessor"), and Petro Source
Refining Corporation, a corporation organized and existing under
the laws of the State of Texas with its mailing address and chief
place of business at 9801 Westheimer, Suite 900, TX 77042
(hereinafter called "Lessee").
WITNESSETH:
I. LEASING:
(a) Subject to the terms and conditions set forth below, Lessor
agrees to lease to Lessee, and Lessee agrees to lease from
Lessor, the equipment ("Equipment") described in Annex A to any
schedule hereto ("Schedule"). Terms defined in a Schedule and
not otherwise defined herein shall have the meanings ascribed to
them in such Schedule.
(b) The obligation of Lessor to purchase Equipment from the
manufacturer or supplier thereof ("Supplier") and to lease the
same to Lessee under any Schedule shall be subject to receipt by
Lessor, prior to the Lease Commencement Date (with respect to
such Equipment), of each of the following documents in form and
substance satisfactory to Lessor: (i) a Schedule relating to the
Equipment then to be leased hereunder, (ii) Purchase Order
Assignment and Consent in the form of Annex B to the applicable
Schedule, unless Lessor shall have delivered its purchase order
for such Equipment, (iii) evidence of insurance which complies
with the requirements of Section IX, and (iv) such other
documents as Lessor may reasonably request. As a further
condition to such obligation of Lessor, Lessee shall, upon
delivery of such Equipment (but not later than the Last Delivery
Date specified in the applicable Schedule) execute and deliver to
Lessor a Certificate of Acceptance (in the form of Annex C to the
applicable Schedule) covering such Equipment, and, if requested
by Lessor, deliver to Lessor a bill of sale therefor (in form and
substance satisfactory to Lessor). Lessor hereby appoints Lessee
its agent for inspection and acceptance of the Equipment from the
Supplier. Upon execution by Lessee of any Certificate of
Acceptance, the Equipment described thereon shall be deemed to
have been delivered to, and irrevocably accepted by, Lessee for
lease hereunder.
II. TERM, RENT AND PAYMENT:
(a) The rent payable hereunder and Lessee's right to use the
Equipment shall commence on the date of execution by Lessee of
the Certificate of Acceptance for such Equipment ("Lease
Commencement Date"). The term of this Agreement shall be the
period specified in the applicable Schedule. If any term is
extended, the word "term" shall be deemed to refer to all
extended terms, and all provisions of this Agreement shall apply
during any extended terms, except as may be otherwise
specifically provided in writing.
(b) Rent shall be paid to Lessor at its address stated above,
except as otherwise directed by Lessor. Payments of rent shall
be in the amount set forth in, and due in accordance with, the
provisions of the applicable Schedule. If one or more Advance
Rentals are payable, such Advance Rental shall be (i) set forth
on the applicable Schedule, (ii) due upon acceptance by Lessor of
such Schedule, and (iii) when received by Lessor, applied to the
first rent payment and the balance, if any, to the final rental
payment(s) under such Schedule. In no event shall any Advance
Rental or any other rent payments be refunded to Lessee. If rent
is not paid within ten (10) days of its due date, Lessee agrees
to pay a late charge of five cents ($.05) per dollar on, and in
addition to, the amount of such rent but not exceeding the lawful
maximum, if any.
III. TAXES: Except as provided in Section XIV(c), Lessee shall
have no liability for taxes imposed by the United States of
America or any State or political subdivision thereof which are
on or measured by the net income of Lessor. Lessee shall report
(to the extent that it is legally permissible) and pay promptly
all other taxes, fees and assessments due, imposed, assessed or
levied against any Equipment (or the purchase, ownership,
delivery, leasing, possession, use or operation thereof), this
Agreement (or any rentals or receipts hereunder), any Schedule,
Lessor or Lessee by any foreign, federal, state or local
government or taxing authority during or related to the term of
this Agreement, including, without limitation, all license and
registration fees, and all sales, use, personal property, excise,
gross receipts, franchise, stamp or other taxes, imposts, duties
and charges, together with any penalties, fines or interest
thereon (all hereinafter called "Taxes"). Lessee shall
(i) reimburse Lessor upon receipt of written request for
reimbursement for any Taxes charged to or assessed against
Lessor, (ii) on request of Lessor, submit to Lessor written
evidence of Lessee's payment of Taxes, (iii) on all reports or
returns show the ownership of the Equipment by Lessor, and
(iv) send a copy thereof to Lessor.
IV. REPORTS:
(a) Lessee will notify Lessor in writing, within ten (10) days
after any tax or other lien shall attach to any Equipment, of the
full particulars thereof and of the location of such Equipment on
the date of such notification.
(b) Lessee will within one hundred twenty (120) days of the
close of each fiscal year of Lessee, deliver to Lessor, Lessee's
balance sheet and profit and loss statement, certified by a
recognized firm of certified public accountants. Upon request
Lessee will deliver to Lessor quarterly, within one hundred
twenty (120) days of the close of each fiscal quarter of Lessee,
in reasonable detail, copies of Lessee's quarterly financial
report certified by the chief financial officer of Lessee.
(c) Lessee will permit Lessor to inspect any Equipment during
normal business hours.
(d) Lessee will keep the Equipment at the Equipment Location
(specified in the applicable Schedule) and will promptly notify
Lessor of any relocation of Equipment. Upon the written request
of Lessor, Lessee will notify Lessor forthwith in writing of the
location of any Equipment as of the date of such notification.
(e) Lessee will promptly and fully report to Lessor in writing
if any Equipment is lost or damaged (where the estimated repair
costs would exceed ten percent (10%) of its then fair market
value), or is otherwise involved in an accident causing personal
injury or property damage.
(f) Within sixty (60) days after any request by Lessor, Lessee
will furnish a certificate of an authorized officer of Lessee
stating that he has reviewed the activities of Lessee and that,
to the best of his knowledge, there exists no default (as
described in Section XI) or event which with notice or lapse of
time (or both) would become such a default.
V. DELIVERY, USE AND OPERATION:
(a) All Equipment shall be shipped directly from the supplier to
Lessee.
(b) Lessee agrees that the Equipment will be used by Lessee
solely in the conduct of its business and in a manner complying
with all applicable federal, state, and local laws and
regulations.
(c) LESSEE SHALL NOT ASSIGN, MORTGAGE, SUBLET OR HYPOTHECATE ANY
EQUIPMENT, OR THE INTEREST OF LESSEE HEREUNDER, NOR SHALL LESSEE
REMOVE ANY EQUIPMENT FROM THE CONTINENTAL UNITED STATES, WITHOUT
THE PRIOR WRITTEN CONSENT OF THE LESSOR.
(d) Lessee will keep the Equipment free and clear of all liens
and encumbrances other than those which result from acts of
Lessor.
VI. SERVICE:
(a) Lessee will, at its sole expense, maintain each unit of
Equipment in good operating order, repair, condition and
appearance in accordance with manufacturer's recommendations,
normal wear and tear excepted. Lessee shall, if at any time
requested by Lessor, affix in a prominent position on each unit
of Equipment plates, tags or other identifying labels showing
ownership thereof by Lessor.
(b) Lessee will not, without the prior consent of Lessor, affix
or install any accessory, equipment or device on any Equipment if
such addition will impair the originally intended function or use
of such Equipment. With Lessor's consent, Lessee may remove any
additional accessories, equipment, or devices if Equipment is
restored to its original condition. All additions, repairs,
parts, supplies, accessories, equipment, and devices furnished,
attached or affixed to any Equipment which are not readily
removable shall be made only in compliance with applicable law,
including Internal Revenue Service guidelines, and shall become
the property of Lessor. Lessee will not, without the prior
written consent of Lessor and subject to such conditions as
Lessor may impose for its protection, affix or install any
equipment to or in any other personal or real property.
(c) Any alterations or modifications to the Equipment that may,
at any time during the term of this Agreement, be required to
comply with any applicable law, rule or regulation shall be made
at the expense of Lessee.
VII. STIPULATED LOSS VALUE: Lessee shall promptly and fully
notify Lessor in writing if any unit of Equipment shall be or
become worn out, lost, stolen, destroyed, irreparably damaged in
the reasonable determination of Lessee, or permanently rendered
unfit for use from any cause whatsoever (such occurrences being
hereinafter called "Casualty Occurrences"). On the rental
payment date next succeeding a Casualty Occurrence (the "Payment
Date"), Lessee shall pay Lessor the sum of (x) the Stipulated
Loss Value of such unit calculated as of the rental next
preceding such Casualty Occurrence ("Calculation Date"); and
(y) all rental and other amounts which are due hereunder as of
the Payment Date. Upon payment of all sums due hereunder, the
term of this Lease as to such unit shall terminate and (except in
the case of the loss, theft or complete destruction of such unit)
Lessor shall be entitled to recover possession of such unit.
VIII. LOSS OR DAMAGE: Lessee hereby assumes and shall bear
the entire risk of any loss, theft, damage to, or destruction of,
any unit of Equipment from any cause whatsoever from the time the
Equipment is shipped to Lessee.
IX. INSURANCE: Lessee agrees, at its own expense, to keep all
Equipment insured for such amounts and against such hazards as
Lessor may require, including, but not limited to, insurance for
damage to or loss of such Equipment and liability coverage for
personal injuries, death or property damage, with Lessor named as
additional insured and with a loss payable clause in favor of
Lessor, as its interest may appear, irrespective of any breach of
warranty or other act or omission of Lessee. The insurance shall
provide (i) liability coverage in an amount equal to at least ONE
MILLION U.S. DOLLARS ($1,000,000.00) total liability per
occurrence, unless otherwise stated in any Schedule, and
(ii) casualty/property damage coverage in an amount equal to the
higher of the Stipulated Loss value or the full replacement cost
of the Equipment; or at such other amounts as may be required by
Lessor. All such policies shall be with companies, and on terms,
satisfactory to Lessor. Lessee agrees to deliver to Lessor
evidence of insurance satisfactory to Lessor. No insurance shall
be subject to any co-insurance clause. Lessee hereby appoints
Lessor as Lessee's attorney-in-fact to make proof of loss and
claim for insurance, and to make adjustments with insurers and to
receive payment of and execute or endorse all documents, check or
drafts in connection with payments made as a result of such
insurance policies. Any expense of Lessor in adjusting or
collecting insurance shall be borne by Lessee. Lessee will not
make adjustments with insurers except (i) with respect to claims
for damage to any unit of Equipment where the repair costs do not
exceed ten percent (10%) of such unit's fair market value, or
(ii) with Lessor's written consent. Said policies shall provide
that the insurance may not be altered or canceled by the insurer
until after thirty (30) days written notice to Lessor. Lessor
may, at its option, apply proceeds of insurance, in whole or in
part, to (i) repair or replace Equipment or any portion thereof,
or (ii) satisfy any obligation of Lessee to Lessor hereunder.
X. RETURN OF EQUIPMENT:
(a) Upon any expiration or termination of this Agreement or any
Schedule, Lessee shall promptly, at its own cost and expense:
(i) perform any testing and repairs required to place the
affected units of Equipment in the same condition and appearance
as when received by Lessee (reasonable wear and tear excepted)
and in good working order for their originally intended purpose;
(ii) if deinstallation, disassembly or crating is required, cause
such units to be deinstalled, disassembled and crated by an
authorized manufacturer's representative or such other service
person as is satisfactory to Lessor; and (iii) return such units
to a location within the continental United States as Lessor
shall direct.
(b) Until Lessee has fully complied with the requirements of
Section X(a) above, Lessee's rent payment obligation and all
other obligations under this Agreement shall continue from month
to month notwithstanding any expiration or termination of the
Lease term. Lessor may terminate such continued leasehold
interest upon ten (10) days notice to Lessee.
XI. DEFAULT:
(a) Lessor may in writing declare this Agreement in default if:
Lessee breaches its obligation to pay rent or any other sum when
due and fails to cure the breach within ten (10) days; Lessee
breaches any of its insurance obligation under Section IX; Lessee
breaches any of its other obligations and fails to cure that
breach within thirty (30) days after written notice thereof; any
representation or warranty made by Lessee in connection with this
Agreement shall be false or misleading in any material respect;
Lessee becomes insolvent or ceases to do business as a going
concern; any Equipment is illegally used; or a petition is filed
by or against Lessee or any Guarantor of Lessee's obligations to
Lessor under any bankruptcy or insolvency laws. Such declaration
shall apply to all Schedules except as specifically excepted by
Lessor.
(b) After default, at the request of Lessor, Lessee shall comply
with the provisions of Section X(a). Lessee hereby authorizes
Lessor to enter, with or without legal process, any premises
where any Equipment is believed to be and take possession
thereof. Lessee shall, without further demand, forthwith pay to
Lessor (i) as liquidated damages for loss of a bargain and not as
a penalty, the Stipulated Loss Value of the Equipment (calculated
as of the rental next preceding the declaration of default), and
(ii) all rentals and other sums then due hereunder. Lessor may,
but shall not be required to, sell Equipment at private or public
sale, in bulk or in parcels, with or without notice, and without
having the Equipment present at the place of sale; or Lessor may,
but shall not be required to lease, otherwise dispose of or keep
idle all or part of the Equipment; and Lessor may use Lessee's
premises for any or all of the foregoing without liability for
rent, costs, damages or otherwise. The proceeds of sale, lease
or other disposition, if any, shall be applied in the following
order of priorities: (1) to pay all of Lessor's costs, charges
and expenses incurred in taking, removing, holding, repairing and
selling, leasing or otherwise disposing of Equipment; then (2) to
the extent not previously paid by Lessee, to pay Lessor all sums
due from Lessee hereunder; then (3) to reimburse to Lessee any
sums previously paid by Lessee as liquidated damages; and (4) any
surplus shall be retained by Lessor. Lessee shall pay any
deficiency in (1) and (2) forthwith.
(c) The foregoing remedies are cumulative, and any or all
thereof may be exercised in lieu of or in addition to each other
or any remedies at law, in equity, or under statute. Lessee
waives notice of sale or other disposition (and the time and
place thereof), and the manner and place of any advertising.
Lessee shall pay Lessor's actual attorneys' fees incurred in
connection with the enforcement, assertion, defense or
preservation of Lessor's rights and remedies hereunder, or if
prohibited by law, such lesser sum as may be permitted. Waiver
of any default shall not be a waiver of any other or subsequent
default.
(d) Any default under the terms of this or any other agreement
between Lessor and Lessee may be declared by Lessor a default
under this and any such other agreement.
XII. ASSIGNMENT:
(a) Lessor may, without the consent of Lessee, assign this
Agreement or any Schedule. Lessee agrees that if Lessee receives
written notice of an assignment from Lessor, Lessee will pay all
rent and all other amounts payable under any assigned Equipment
Schedule to such assignee or as instructed by Lessor. Lessee
further agrees to confirm in writing receipt of the notice of
assignment as may be reasonably requested by assignee. Lessee
hereby waives and agrees not to assert against any such assignee
any defense, set-off, recoupment claim or counterclaim which
Lessee has or may at any time have against Lessor for any reason
whatsoever.
(b) Lessor hereby consents and allows Lessee to sublease
equipment in place to its subsidiaries or affiliates; and Lessee
will in writing notify Lessor within thirty (30) days of any
change of an assignment of this equipment.
XIII. NET LEASE; NO SET-OFF, ETC.: This Agreement is not a
net lease. Lessee's obligation to pay rent and other amounts due
hereunder shall be absolute and unconditional. Lessee shall not
be entitled to any abatement or reductions of, or set-offs
against, said rent or other amounts, including, without
limitation, those arising or allegedly arising out of claims
(present or future, alleged or actual, and including claims
arising out of strict tort or negligence of Lessor) of Lessee
against Lessor under this Agreement or otherwise. Nor shall this
Agreement terminate or the obligations of Lessee be affected by
reason of any defect in or damage to, or loss of possession, use
or destruction of, any Equipment from whatsoever cause. It is
the intention of the parties that rents and other amounts due
hereunder shall continue to be payable in all events in the
manner and at the times set forth herein unless the obligation to
do so shall have been terminated pursuant to the express terms
hereof.
XIV. INDEMNIFICATION:
(a) Lessee hereby agrees to indemnify, save and keep harmless
Lessor, its agents, employees, successors and assigns from and
against any and all losses, damages, penalties, injuries, claims,
actions and suits, including legal expenses, of whatsoever kind
and nature, in contract or tort, whether caused by the active or
passive negligence of Lessor or otherwise and including, but not
limited to, Lessor's strict liability in tort, arising out of
(i) the selection, manufacture, purchase, acceptance or rejection
of Equipment, the ownership of Equipment during the term of this
Agreement, and the delivery, lease, possession, maintenance,
uses, condition, return or operation of Equipment (including,
without limitation, latent and other defects, whether or not
discoverable by Lessor or Lessee and any claim for patent,
trademark or copyright infringement or environmental damage) or
(iii) the condition of Equipment sold or disposed of after use by
Lessee, any sublessee or employees of Lessee. Lessee shall, upon
request, defend any actions based on, or arising out of, any of
the foregoing.
(b) If as a result of a breach of any representation, warranty
or covenant of the Lessee contained in this Agreement or any
Schedule (x) tax counsel of Lessor shall determine that Lessor is
not entitled to claim on its Federal income tax return all or any
portion of the Tax Benefits with respect to any Equipment, or
(y) any such Tax Benefit claimed on the Federal income tax return
of Lessor is disallowed or adjusted by the Internal Revenue
Service, or (z) any such Tax Benefit is recomputed or recaptured
(any such determination, disallowance, adjustment, recomputation
or recapture being hereinafter called a "Loss"), then Lessee
shall pay to Lessor, as an indemnity and as additional rent, such
amount as shall, in the reasonable opinion of Lessor, cause
Lessor's after-tax economic yields and cash flows, computed on
the same assumptions, including tax rates (unless any adjustment
has been made hereof, in which case the Effective Rate used in
the next preceding adjustment shall be substituted), as were
utilized by Lessor in originally evaluating the transaction (such
yields and flows being hereinafter called the "Net Economic
Return") to equal the Net Economic Return that would have been
realized by Lessor if such Loss had not occurred. Such amount
shall be payable upon demand accompanied by a statement
describing in reasonable detail such Loss and the computation of
such amount.
(c) All of Lessor's right, privileges and indemnities contained
in this Section XIV shall survive the expiration or other
termination of this Agreement and the rights, privileges and
indemnities contained herein are expressly made for the benefit
of, and shall be enforceable by Lessor, its successors and
assigns.
XV. DISCLAIMER: LESSEE ACKNOWLEDGES THAT IT HAS SELECTED THE
EQUIPMENT WITHOUT ANY ASSISTANCE FROM LESSOR, ITS AGENTS OR
EMPLOYEES. LESSOR DOES NOT MAKE, HAS NOT MADE, NOR SHALL BE
DEEMED TO MAKE OR HAVE MADE, ANY WARRANTY OR REPRESENTATION,
EITHER EXPRESS OR IMPLIED, WRITTEN OR ORAL, WITH RESPECT TO THE
EQUIPMENT LEASED HEREUNDER OR ANY COMPONENT THEREOF, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTY AS TO DESIGN, COMPLIANCE WITH
SPECIFICATIONS, QUALITY OF MATERIALS OR WORKMANSHIP,
MERCHANTABILITY, FITNESS FOR ANY PURPOSE, USE OR OPERATION,
SAFETY, PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT, OR TITLE.
All such risks, as between Lessor and Lessee, are to be borne by
Lessee. Without limiting the foregoing, Lessor shall have no
responsibility or liability to Lessee or any other person with
respect to any of the following, regardless of any negligence of
Lessor (i) any liability, loss or damage caused or alleged to be
caused directly or indirectly by any Equipment, any inadequacy
thereof, any deficiency or defect (latent or otherwise) therein,
or any other circumstance in connection therewith; (ii) the use,
operation or performance of any Equipment or any risks relating
thereto; (iii) any interruption of service, loss of business or
anticipated profits or consequential damages; or (iv) the
delivery, operation, servicing, maintenance, repair, improvement
or replacement of any Equipment. If, and so long as, no default
exists under this Lease, Lessee shall be, and hereby is,
authorized during the term of this Lease to assert and enforce,
at Lessee's sole cost and expense, from time to time, in the name
of and for the account of Lessor and/or Lessee, as their
interests may appear, whatever claims and rights Lessor may have
against any Supplier of the Equipment.
XVI. REPRESENTATIONS AND WARRANTIES OF LESSEE: Lessee hereby
represents and warrants to Lessor that on the date hereof and on
the date of execution of each Schedule:
(a) Lessee has adequate power and capacity to enter into, and
perform under, this Agreement and all related documents
(together, the Documents") and is duly qualified to do business
wherever necessary to carry on its present business and
operations, including the jurisdiction(s) where the Equipment is
or is to be located.
(b) The documents have been duly authorized, executed and
delivered by Lessee and constitute valid, legal and binding
agreements, enforceable in accordance with their terms, except to
the extent that the enforcement of remedies therein provided may
be limited under applicable bankruptcy and insolvency laws.
(c) No approval, consent or withholding of objections is
required from any governmental authority or instrumentality with
respect to the entry into or performance by Lessee of the
Documents except such as have already been obtained.
(d) The entry into and performance by Lessee of the Documents
will not: (i) violate any judgment, order, law or regulation
applicable to Lessee or any provision of Lessee's Certificate of
Incorporation or By-Laws; or (ii) result in any breach of,
constitute a default under or result in the creation of any lien,
charge, security interest or other encumbrance upon any Equipment
pursuant to any indenture, mortgage, deed of trust, bank loan or
credit agreement or other instrument (other than this Agreement)
to which Lessee is a party.
(e) There are no suits or proceedings pending or threatened in
court or before any commission, board or other administrative
agency against or affecting Lessee, which will have a material
adverse effect on the ability of Lessee to fulfill its
obligations under this Agreement.
(f) The Equipment accepted under any Certificate of Acceptance
is and will remain tangible personal property.
(g) Each Balance Sheet and Statement of Income delivered to
Lessor has been prepared in accordance with generally accepted
accounting principles, and since the date of the most recent such
Balance Sheet and Statement of Income, there has been no material
adverse change.
(h) Lessee is and will be at all times validly existing and in
good standing under the laws of the state of its incorporation
(specified in the first sentence of this Agreement).
(i) The Equipment will at all times be used for commercial or
business purposes.
XVII. EARLY TERMINATION:
(a) On or after the First Termination Date (specified in the
applicable Schedule), Lessee may, so long as no default exists
hereunder, terminate this Agreement as to all (but not less than
all) of the Equipment on such Schedule as of a rent payment date
("Termination Date") upon at least ninety (90) days prior written
notice to Lessor.
(b) Lessee shall, and Lessor may, solicit cash bids for the
Equipment on an AS IS, WHERE IS BASIS without recourse to or
warranty from Lessor, express or implied ("AS IS BASIS"). Prior
to the Termination Date, Lessee shall (i) certify to Lessor any
bids received by Lessee and (ii) pay to Lessor (A) the
Termination Value (calculated as of the rental due on the
Termination Date) for the Equipment, and (B) all rent and other
sums due and unpaid as of the Termination Date.
(c) Provided that all amounts due hereunder have been paid on
the Termination Date, Lessor shall (i) sell the Equipment on an
AS IS BASIS for cash to the highest bidder and (ii) refund the
proceeds of such sale (net of any related expenses) to Lessee up
to the amount of the Termination Value. If such sale is not
consummated, no termination shall occur and Lessor shall refund
the Termination Value (less any expenses incurred by Lessor) to
Lessee.
(d) Notwithstanding the foregoing, Lessor may elect by written
notice, at any time prior to the Termination Date, not to sell
the Equipment. In that event, on the Termination Date Lessee
shall (i) return the Equipment (in accordance with Section X) and
(ii) pay to Lessor all amounts required under Section XVII(b)
less the amount of the highest bid certified by Lessee to Lessor.
XVIII. PURCHASE OPTION:
(a) So long as no default exists hereunder and the Lease has not
been earlier terminated, Lessee may at lease expiration, upon at
least sixty (60) days prior written notice to Lessor, purchase
all (but not less than all) of the Equipment in any Schedule on
an AS IS WHERE IS BASIS, without recourse to or warranty from
Lessor, express or implied, for cash equal to its then Fair
Market Value (plus all applicable sales taxes).
(b) "Fair Market Value" shall mean the price which a willing
buyer (who is neither a lessee in possession nor a used equipment
dealer) would pay for the Equipment in an arm's-length
transaction to a willing seller under no compulsion to sell;
provided, however, that in such determination: (i) the Equipment
shall be assumed to be in the condition in which it is required
to be maintained and returned under this Agreement; (ii) in the
case of any installed Equipment, that Equipment shall be valued
on an installed basis; and (iii) costs of removal from current
location shall not be a deduction from such valuation. If Lessor
and Lessee are unable to agree on the Fair Market Value at least
forty-five (45) days before lease expiration, Lessor shall
appoint an independent appraiser (reasonably acceptable to
Lessee) to determine Fair Market Value, and that determination
shall be final, binding and conclusive. Lessee shall bear all
costs associated with any such appraisal.
(c) Lessee shall be deemed to have waived this option unless it
provides Lessor with written notice of its irrevocable election
to exercise the same within fifteen (15) days after Fair Market
Value is determined (by agreement or appraisal.
XIX. MISCELLANEOUS:
(a) LESSEE HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT
OF, DIRECTLY OR INDIRECTLY, THIS LEASE, ANY OF THE RELATED
DOCUMENTS, ANY DEALINGS BETWEEN LESSEE AND LESSOR RELATING TO THE
SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS,
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN LESSEE
AND LESSOR. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL
ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY
COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND
STATUTORY CLAIMS). THIS WAIVER IS IRREVOCABLE MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER
SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS LEASE, ANY RELATED DOCUMENTS, OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY
RELATED TRANSACTION. IN THE EVENT OF LITIGATION, THIS LEASE MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
(b) Unless and until Lessee exercises its rights under Section
XVIII above, nothing herein contained shall give or convey to
Lessee any right, title or interest in and to any Equipment
except as a lessee. Any cancellation or termination by Lessor,
pursuant to the provisions of this Agreement, any Schedule,
supplement or amendment hereto, or the lease of any Equipment
hereunder, shall not release Lessee from any then outstanding
obligations to Lessor hereunder. All Equipment shall at all
times remain personal property of Lessor regardless of the degree
of its annexation to any real property and shall not by reason of
any installation in, or affixation to, real or personal property
become a part thereof.
(c) Time is of the essence of this Agreement. Lessor's failure
at any time to require strict performance by Lessee of any of the
provisions hereof shall not waive or diminish Lessor's right
thereafter to demand strict compliance therewith. Lessee agrees,
upon Lessor's request, to execute any instrument necessary or
expedient for filing, recording or perfecting the interest of
Lessor. All notices required to be given hereunder shall be
deemed adequately given if sent by registered or certified mail
to the addressee at its address stated herein, or at such other
place as such addressee may have designated in writing. This
Agreement and any Schedule and Annexes thereto constitute the
entire agreement of the parties with respect to the subject
matter hereof. NO VARIATION OR MODIFICATION OF THIS AGREEMENT OR
ANY WAIVER OF ANY OF ITS PROVISIONS OR CONDITIONS SHALL BE VALID
UNLESS IN WRITING AND SIGNED BY AN AUTHORIZED REPRESENTATIVE OF
THE PARTIES HERETO.
(d) In case of a failure of Lessee to comply with any provision
of this Agreement, Lessor shall have the right, but shall not be
obligated, to effect such compliance, in whole or in part; and
all moneys spent and expenses and obligations incurred or assumed
by Lessor in effecting such compliance shall constitute
additional rent due to Lessor within five (5) days after the date
Lessor sends notice to Lessee requesting payment. Lessor's
effecting such compliance shall not be a waiver of Lessee's
default.
(e) Any rent or other amounts not paid to Lessor when due
hereunder shall bear interest, both before and after any judgment
or termination hereof, at the lesser of eighteen percent (18%)
per annum or the maximum rate allowed by law. Any provisions in
this Agreement and any Schedule which are in conflict with any
statute, law or applicable rule shall be deemed omitted, modified
or altered to conform thereto.
IN WITNESS WHEREOF, Lessee and Lessor have caused this
Schedule to be executed by their duly authorized representatives
as of the date first above written.
LESSOR: LESSEE:
Astec Financial Services,Inc. Petro Source Refining
Corporation
Name: Name: Don Pine
Title: Title: Vice President & CFO
3
LEASE AGREEMENT
This Agreement made and entered in this 6th of June, 1996,
by and between PacifiCorp, an Oregon Corporation, dba UTAH POWER
& LIGHT COMPANY, hereinafter referred to as "Lessor", and PETRO
SOURCE REFINING CORPORATION, a Nevada Corporation, ("PSRC"), of
9801 Westheimer, Suite 900, Houston, Texas 77042, hereinafter
"Lessee".
WITNESSETH:
Whereas, Lessee is desirous of leasing property for the
purpose of ingress and egress to obtain access to property known
as the tank farm which is being leased under a separate agreement
("Tank Farm Lease").
Whereas, Lessor is the owner of certain real property known
as 1221 and 1223 West North Temple in the City of Salt Lake,
County of Salt Lake, State of Utah.
Now, therefore, it is hereby agreed as follows:
1. Lessor does lease to Lessee the following described
property, hereinafter referred to as "Leased Premises" for the
purpose of establishing ingress and egress to the tank farm.
Commencing at a point 660 feet north and 576 feet
east of the southwest corner of Section 35,
Township 1 North, Range 1 West, Salt Lake
Meridian, thence East 370 feet to the west bank of
the Jordan River, running thence South along bank
of said river approximately 340 feet to the
existing fence line, thence West 460 feet, thence
North 340 feet to the point of beginning.
2. The term of this Lease shall be for Seven (7) years
beginning on the 1st day of April, 1996, through the 31st day of
March, 2003 (or upon termination of the Tank Farm Lease
Agreement, whichever is earlier), upon and subject to the
following terms and conditions:
3. Lessee agrees and covenants with Lessor to pay as rent for
the Leased Premises the sum of ONE THOUSAND EIGHT HUNDRED AND
NO/100 DOLLARS ($1800.00), which shall be paid in the following
manner: ONE HUNDRED FIFTY AND NO/100 DOLLARS ($150.00) per month
in advance due on the first day of each month or one payment of
ONE THOUSAND EIGHT HUNDRED AND NO/100 DOLLARS ($1800.00) to be
paid at the first day of April each year. Payments to be sent
to:
Utah Power & Light Company
Property Management Dept. Suite 110
1407 West North Temple
Salt Lake City, Utah 84140
4. Lessee shall use the Leased Premises solely for ingress and
egress to access the tank farm for the loading and unloading of
asphalt product.
5. Should Lessee make improvements, which would change the
current natural ground elevation, Lessee must contact Lessor for
written approval to do so. This is to insure that Lessor's
vertical clearance requirement (wire to ground) will be
maintained at all times.
6. Lessee shall not assign this Lease or sublet the Leased
Premises or any party thereof or use or suffer the use of the
Leased Premises for any other purpose than as herein stated.
7. If either party fails to comply fully with any of the terms
hereof, the defaulting party shall have fifteen (15) days to cure
the default following receipt of written notice from the non-
defaulting party. If said Lease is cancelled pursuant to this
Paragraph, or for any other reason, Lessee shall not be entitled
to damages of any kind, including lost profits, relocation costs,
or expenses.
8. Should Lessee vacate the Leased Premises before the
expiration of this Lease Agreement or violate any of the other
covenants hereof, Lessor, in addition to all other legal
remedies, may enter into possession of the Leased Premises.
9. Said Leased Premises is leased and accepted by Lessee in its
present condition and Lessor makes no warranties as to the
present or future condition of said Leased Premises or any
portion thereof and it is expressly understood and agreed that
Lessor is under no obligation at any time during the term of this
Lease to repair, maintain or improve said Leased Premises.
10. Lessor reserves the right to erect upon and traverse the
Leased Premises with electric transmission and distribution
lines, and Lessor, by its duly authorized agents or employees,
shall have the right to enter upon the Leased Premises at any
time to construct and maintain such electric lines, and for
related purposes. Provided, however, that Lessor's activities in
this regard shall not unreasonably interfere with Lessee's use of
the Leased Premises.
11. PacifiCorp agrees to protect, defend, indemnify and hold
harmless PSRC, its officers, agents, and employees from and
against all claims, losses, damages, causes of action, suits and
liability of every kind and character, for injury to or death of
any person, or for damages to any property, arising out of or in
connection with PaciCorp's breach of this Agreement or PaciCorp's
performance hereunder, to the extent and degree that such damages
or injures have been caused by the negligence or willful
misconduct of PacifiCorp or a third party whose actions are
controlled by or directed by PacifiCorp.
PSRC agrees to protect, defend, indemnify and hold harmless
PacifiCorp, its officers agents, and employees from and against
all claims, losses, damages, causes of action suits and liability
of every kind and character, for injury to or death of any
person, or for damages to any property, arising out of or in
connection with Parco's breach of this Agreement or Parco's
performance hereunder, to the extent that such damages or
injuries have been caused by the negligence or willful misconduct
of PSRC or a third party whose actions are controlled or directed
by PSRC.
12. In addition to the general indemnity above, PacifiCorp
hereby specifically agrees to fully indemnify and hold PSRC, its
officers, agents and employees harmless from and against any and
all claims, demands, losses, costs of removal and/or clean up of
any pollutants, judgments, causes of actions, fines, penalties,
costs (including attorney's fees and costs of court), or
otherwise arising out of or connected with environmental
conditions or pollution with respect to the Leased Premises;
provided however, that such indemnity obligations of PacifiCorp
shall not apply if the underlying claims directly resulting from
the negligence or willful misconduct of PSRC, its agents or
employees.
PSRC hereby specifically agrees to fully indemnify and hold
PacifiCorp, its officers, agents and employees harmless from and
against any and all claims, demands, losses, costs of removal
and/or clean up of any pollutants, judgments, causes of actions,
fines, penalties, costs (including attorney's fees and cost of
court), or otherwise arising out of or connected with
environmental conditions or pollution to the extent such claims
directly resulting from the negligence or willful misconduct of
PSRC, its agents or employees.
13. At no time shall any flammable material (including, but not
limited to, chemical solvents, gasoline, rubbish piles,
haystacks, or lumber products), any structure or building or any
kind of equipment in excess of 13'6" in height, be placed,
erected, or stored within the boundaries of said Leased Premises.
14. Before making any improvements upon the Leased Premises or
any changes in the general landscaping thereof, Lessee will first
secure written consent from Lessor to do so. More particularly,
Lessee will not install any vertical lighting structures on the
Leased Premises without written approval from Lessor.
15. Lessee's improvements shall, when this Lease expires or is
terminated, become the property of the Lessor.
16. In case either party shall resort to legal proceedings to
enforce any of the Lease's covenants hereunder or to obtain
possession of the Leased Premises for breach of said covenants,
the non-prevailing party will pay all costs and expenses,
including reasonable attorney's fees, arising before or after
litigation is instituted.
17. Lessor shall have the right to lease the property for
parking of automobiles during the Utah State Fair and will work
with Lessee to provide that access is still maintained to the
tank farm.
EXECUTED this 6 day of June, 1996
LESSEE: LESSOR:
Petro Source PacifiCorp, an Oregon
Refining Co. Corporation dba Utah Power & Light Company
By: William Townsend By: Mark Whitter
Title: Vice President Client Agent
6
Contract No. 8364
GENERAL AMERICAN TRANSPORTATION CORPORATION
Car Service Contract
THIS AGREEMENT, made and entered into as of the 10th day of
December, 1987, by and between GENERAL AMERICAN TRANSPORTATION
CORPORATION, a New York corporation ("GATX"), and PETRO SOURCE
CORPORATION, a Utah corporation ("Customer"),
1. Definitions.
(a) "AAR rules": the rules adopted by the Association of
American Railroads governing the condition of and repairs to
railroad cars for the interchange of freight traffic, as
currently in effect and as subsequently amended.
(b) "car" or "cars": the car or cars described in Riders
attached to this Agreement.
(c) "claims": any and all liability, charge, cost, loss,
damage, expense or demand (including for personal injury or
death), including reasonable attorneys' fees and court costs
respecting the prosecution or defense thereof.
(d) "cleaned of commodities": cleaned of all commodities and
accumulations and deposits caused by commodities to the effect
that there is no measurable amount of such commodities,
accumulations and deposits remaining in the car and the car is
safe for human entry.
(e) "private tracks or premises": tracks or premises having
other than railroad ownership, except that tracks or premises
belonging to a railroad and leased to others than railroads shall
be considered private tracks or premises.
(f) "unavoidable delay": any GATX/Customer delay due to strike,
lockout, act of God, inability to obtain labor or materials, act
or failure to act of Customer/GATX, governmental action or
restriction, enemy action, civil commotion, fire, casualty, or
any other cause beyond the control of GATX/Customer whether or
not of the class of causes heretofore enumerated.
2. Description of Cars - Service Charges. GATX shall furnish
to Customer and Customer shall accept and use, on the terms and
conditions hereinafter set forth, the car or cars for the use of
each of which Customer shall pay GATX the service charges set
forth on the Riders attached to this Agreement. Service charges
with respect to each car shall commence upon delivery of each car
to Customer and shall continue in effect, subject to Article 6
hereof, until each such car is returned to GATX in accordance
with Article 5 hereof. Service charges shall accrue monthly, in
advance, upon the first day of each month, and Customer shall be
invoiced monthly. Except for disputed amounts, payments of all
charges payable by Customer to GATX under this Agreement shall be
made, without deduction, to GATX at the address shown on the
invoice within fifteen (15) days following the date of invoice.
Payments not made within thirty (30) days of invoice may, at
GATX's option, bear interest at the rate of 1% over the prime
rate of interest quoted by Citibank N.A. per month on the unpaid
balance (or such lesser interest rate as may be consistent with
the law of the state of Customer's domicile) until the balance is
paid.
3. Delivery/Acceptance of Cars. Each car shall be deemed
delivered to Customer hereunder upon acceptance by a railroad of
instructions to forward such car to the destination point
designated by Customer, except that any car which is already in
Customer's service under an expiring agreement or an agreement
terminated hereby shall be deemed delivered to Customer hereunder
immediately upon the expiration or termination of such agreement.
Furnishing of any car to Customer hereunder shall be subject to
unavoidable delay. Customer shall cause each car delivered
hereunder to be inspected within five (5) days after receipt at
the destination point designated by Customer and failure of
Customer promptly to report to GATX any defect in the car shall
constitute acceptance of such car by Customer.
4. Inspection of Cars/Responsibility for Damage. Customer is
responsible for having each car visually inspected prior to each
loading to determine whether such car is suitable for receiving,
transporting and discharging the commodity to be loaded therein.
Customer shall indemnify and hold GATX harmless from all claims
resulting from conditions which have or should have been
determined from such inspection. In addition, Customer shall be
responsible for any loss of or damage (including corrosion
damage) to any commodity, or to any car or part thereof caused by
the commodity contained therein or incurred in the process of
loading or unloading such commodity, or caused by the chemical
environment in which the car is loaded, unloaded or stored, and
Customer shall indemnify GATX from all claims resulting
therefrom, unless such claims result directly from the negligent
act or mission of GATX. As between Customer and GATX, Customer
shall be responsible for any and all risk of loss of, damage to,
or destruction of any car, or part thereof, occurring while such
car is located upon private tracks or premises other than GATX's.
5. Return of Cars. Promptly upon the expiration or termination
of this Agreement with respect to any car, Customer shall return
such car to GATX in the same condition complete with all parts,
equipment and accessories as when initially delivered to
Customer, ordinary wear and tear excepted, and cleaned of
commodities; but nothing herein shall be constructed as relieving
GATX from its obligation to maintain the cars as provided in
Article 6 of this Agreement. Each car shall be deemed returned
to GATX and service charges respecting such car shall abate
hereunder when Customer shall release such car to a forwarding
railroad within the boundaries of the United States (excluding
Alaska and Hawaii) in accordance with instructions furnished to
Customer by GATX either at the final unloading point or at such
other point mutually agreed upon between GATX and Customer.
Customer shall give GATX a minimum of thirty (30) days' advance
notice, confirmed promptly in writing, of the return date of each
car, including advice of the last contents of each such car.
GATX shall give Customer disposition instructions for each such
car prior to the later of (a) the return date specified in
Customer's notice, or (b) thirty (30) days following receipt by
GATX of Customer's notice. Notwithstanding the foregoing,
Customer shall pay service charges at 200% of the then current
rate for any car not promptly returned pursuant to the terms
hereof or for any returned car if Customer has not caused the car
to be cleaned of commodities.
GATX may provide cleaning services with respect to some or
all of the cars. Such cleaning services shall be performed
pursuant to a separate Car Cleaning Contract attached to this
Agreement.
6. Maintenance/Modifications/Abatement of Service Charges.
(a) GATX shall have each car maintained in accordance with the
AAR Rules and the rules and regulations of the U.S. Department of
Transportation and of any other federal authorities having
jurisdiction over tank car design, provided (except for normal
running repairs performed by railroads) GATX has been advised or
has actual knowledge of the need for necessary maintenance and
subject to unavoidable delay. No maintenance, alterations or
repairs to any car shall be made or authorized by Customer
without GATX's prior written consent except that Customer shall,
at its expense, replace any removable tank parts (dome covers,
outlet caps, etc.) if lost or damaged. Any maintenance,
alteration, repair or replacement to any car or part thereof made
by Customer shall be done to standards and with parts that are of
like kind and at least equal quality to items being repaired or
replaced. If Customer has or obtains information indicating that
any car requires maintenance, Customer shall promptly notify
GATX. Upon request by GATX, Customer shall make any car needing
maintenance available at a car repair location designated by GATX
cleaned of commodities. If any car is in need of maintenance,
modification or alteration determined by GATX to be uneconomical
to perform or if any car is determined by a railroad to have been
destroyed, GATX has the option to terminate this Agreement with
respect to such car effective upon notification by GATX to
Customer or to substitute another car of approximately the same
age, type and capacity under this Agreement within a period of
time not to exceed sixty (60) days.
(b) If a physical alteration or modification to any car is
required by the AAR or any government, agency, group or committee
exercising authority over tank car design or operation, GATX may,
at its option, perform such alterations or modifications and
Customer shall pay GATX as an additional charge an amount equal
to the greater of (i) $1.50 per car per month for each $100.00
per car cost to GATX to perform such changes or (ii) such
additional monthly charge as will cover the cost of the
modification or alteration, including GATX's then current cost or
money, over the estimated life of such modifications or
alterations or of the car. Such charge will be effective upon
date of acceptance by a railroad of instructions to forward such
car to Customer after such change has been completed. Should
GATX elect to make the alterations or modifications as aforesaid,
Customer shall, upon notice from GATX, make the car available at
a car repair location designated by GATX cleaned of commodities.
(c) (I) When any car is moved to a car repair location (other
than railroad shops) at GATX's request for maintenance,
alteration or modification pursuant to this Article 6, service
charges shall abate upon the date of arrival of such car at such
GATX designated car repair location and shall resume at the end
of the third day following acceptance by a railroad of
instructions to return such car to Customer.
(II) If any car is damaged in a railroad accident and the
railroad delays in deciding whether such car is to be deemed
destroyed, service charges for such car shall abate for the
period commencing on the fifth day following the date upon which
GATX receive notification of such railroad damage and shall
resume at the end of the third day following acceptance by a
railroad of instructions to return said car to Customer.
(III) If any car maintenance is performed other than as set
forth above, service charges shall abate for such car commencing
upon the fifth day following the date upon which GATX shall
receive notice of the need for such maintenance, and shall resume
upon the date on which such maintenance is completed.
(IV) Notwithstanding the foregoing, service charges for any car
shall not abate (A) while such car is out of service (i) due to
damage for which Customer is responsible under this Agreement,
(ii) for lining application, maintenance, renewal or removal,
(iii) during periods of Customer delay in forwarding the car to a
GATX designated facility, (iv) for work, other than normal
maintenance, performed at Customer's request, or (v) for
alteration or modification performed pursuant to Article 6(b; or,
(B) if Customer has not caused the car to be cleaned of
commodities as required under this Agreement.
7. Lining. Customer shall pay the cost of the interior lining
of any car and shall, at its sole cost and expense, maintain and
renew all car linings (both new and currently existing) whenever
necessary during the term of this Agreement, including when
necessitated by repair to other portions of the car; and Customer
is responsible for removing the lining from each car prior to its
return to GATX at the expiration or termination of this Agreement
with respect to such car. This Article 7 shall govern
notwithstanding anything to the contrary in Article 6 hereof.
8. Reports, Mileage and Charges. Customer shall furnish GATX
promptly with complete reports of the movements of each of the
cars, including dates loaded and shipped, commodity, destination,
and full junction routing. GATX shall use its best efforts to
collect mileage earnings as paid by the railroads for car
movements during the term hereof and shall credit such earnings
to Customer's car service account when collected. For purposes
of mileage accounting, all cars under all Car Service Contracts
between GATX and Customer may be, at GATX's option, combined into
a single account for the term of this Agreement, provided that
the total mileage earnings so credited shall not exceed the
aggregate car service charges payable by Customer thereunder. If
the operation of any car during the term of this Agreement would
result in charges being made against GATX by any railroad with
respect to such car in accordance with the then prevailing
tariffs or other applicable rules and regulations to which such
railroad is a party, Customer shall pay GATX for such charges
within the period specified by such tariffs, rules or
regulations; and Customer shall use the cars upon each railroad
over which the cars move in accordance with such tariffs, rules
and regulations to which such railroad is a party.
9. Lettering of Cars. Customer shall place no lettering or
marking of any kind upon the cars without GATX's prior written
consent; except that for the purpose of evidencing the operation
of the cars in Customer's service hereunder or for purposes of
indicating the nature of the material carried in the cars,
Customer shall be permitted to board, placard or stencil the cars
as required or permitted by the AAR Rules or the rules or
regulations of any federal authority having authority over the
lettering of tank cars with letters no greater than two (2)
inches high (unless otherwise required by said authorities). Any
lettering or marking done by Customer must be removed from the
cars at Customer's expense upon termination of this Agreement.
10. Taxes. GATX is responsible for payment of all ad valorem
property taxes levied upon the cars and for filing all necessary
returns and reports for such taxes. Customer shall pay, or cause
to be paid, or shall reimburse GATX for all other taxes,
including, but not limited to, sales, use, rental, gross income,
and excise taxes (except net income taxes) as may be levied or
assessed against GATX or Customer in connection with this
Agreement, or arising out of any sale, lease, rental, use,
operation, ownership, payment, shipment, or delivery of any cars.
11. Indemnification. Customer shall indemnify and save harmless
GATX from and against all claims made against GATX or which GATX
may incur arising out of Customer's failure to comply with the
terms and conditions of this Agreement, unless and to the extent
such claim results from GATX's negligent act or omission, or is a
claim for which a railroad(s) is responsible and has satisfied
such responsibility. All indemnities contained in this Agreement
shall survive the termination of this Agreement, howsoever the
same shall occur.
12. Assignment/Subcontracting/Liens. The cars shall be used
exclusively in the service of Customer, and Customer shall not
furnish, assign or subcontract any car, or make any transfer or
assignment of this Agreement, without GATX's prior written
consent, except that Customer may furnish any car for single
trips to its customers or to its suppliers in accordance with the
provisions of demurrage tariffs lawfully in effect, and provided
that Customer shall remain liable to GATX for the fulfillment of
all obligations under this Agreement. In the event Customer
furnishes, assigns or subcontracts any car in violation of the
foregoing, Customer shall pay GATX a daily surcharge equal to
100% of the prorated daily service charge for such car during the
period of such furnishing, assignment or subcontract. This
Agreement and the rights of Customer herein shall not be
assignable or transferable by operation of law; and no title,
leasehold, or property interest of any kind shall vest in
Customer, or in Customer's successors or assigns, by reason of
this Agreement, or by reason of the delivery of the cars to, or
the use of the cars by, Customer, its successors or assigns
subject to the foregoing limitations on assignment and
subcontracting, this Agreement is binding upon and shall inure to
the benefit of the parties hereto and their successor and
assigns. Customer shall not permit any encumbrance or lien
arising out of acts of or claim against Customer to be entered,
levied, or to exist upon any car; and Customer shall have any
such encumbrance or lien removed immediately after becoming aware
of the existence thereof or upon written notice thereof from
GATX.
13. Remedies. If Customer shall fail to perform any of its
obligations under this Agreement, GATX may (a) without notice or
demand immediately terminate this Agreement with respect to any
or all of the cars covered hereunder and thereafter take
possession of any or all of such cars; or (b) upon seven (7) days
prior written notice to Customer, change the term of this
Agreement to a month-to-month term, subject to termination
thereafter upon ten (10) days prior written notice from either
party to the other; or (c) permit Customer to retain possession
of any or all cars under this Agreement as the same may continue
in force provided Customer shall, within five (5) days after
written notice from GATX cure any and all defaults under this
Agreement, and shall also, within said five (5) day period,
provide to GATX adequate assurances (including collateral
security) of future full performance of this Agreement, so that
all amounts due hereunder shall promptly be paid by Customer to
GATX when they shall become due, and that all covenants hereunder
to be performed by Customer shall be promptly performed by it in
the manner provided herein.
The Customer shall be liable to GATX for all charges
hereunder and no termination nor modification of this Agreement
shall affect or modify any rights, claims, or obligations
hereunder which shall have accrued prior to such termination or
modification, except as otherwise specifically provided by such
termination or modification.
Upon termination by GATX of this Agreement as permitted by
this Article 13, Customer shall thereupon, without further act or
deed by GATX, be completely divested of any and all of Customer's
rights and interests, if any, under this Agreement, and in and to
any and all cars covered hereby. GATX shall thereupon be
entitled to the immediate return of any and all such cars,
cleaned of commodities, all at Customer's expense.
In the event bankruptcy, receivership, insolvency,
reorganization, dissolution, liquidation or other similar
proceeding is instituted by or against Customer, under the United
States Bankruptcy Code or other law of the United States or any
State, then, unless the Customer, as debtor or debtor-in-
possession in any such bankruptcy or other proceeding or any
Trustee acting therein, shall comply with the provisions of
Section 365 of the United States Bankruptcy Code (as now existing
or hereafter amended), GATX shall be entitled to the immediate
return of all cars covered hereby cleaned of commodities, by
summary proceedings, or otherwise, with no liability by reason
thereof. Customer hereby waives any rights now or hereafter
conferred by statute or otherwise to object to or contest any
such legal action or proceeding instituted by GATX to recover
possession of the cars.
The rights and remedies herein given to GATX in no way limit
its right and remedies at law or in equity.
14. Use of Cars. No car shall be utilized in unit train
service, nor shall the average loaded mileage of all cars under
this Agreement exceed eighteen thousand (18,000) miles during any
calendar year during the term hereof, unless consented to in
writing by GATX in advance of such use. The cars shall be used
exclusively within the boundaries of the United States (excluding
Alaska and Hawaii), Canada and Mexico. Customer is responsible
for all taxes and duties and for complying with all governmental
requirements arising out of any of the cars leaving, being
outside of, or returning to the boundaries of the United States;
and Customer shall defend and hold harmless GATX from any claim
connected therewith. Customer shall comply with all AAR and
governmental regulations respecting the use and operation of each
of the cars during the term of this Agreement.
15. Limitation of Obligations. GATX's/Customer's obligations
under this Agreement are limited to those expressly set forth
herein, AND ALL IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS
FOR A PARTICULAR PURPOSE ARE HEREBY DISCLAIMED BY GATX. IN NO
EVENT SHALL GATX/CUSTOMER HAVE ANY LIABILITY FOR CONSEQUENTIAL OR
INCIDENTAL DAMAGES.
16. Subordination. This Agreement and all rights of Customer
(and of any persons claiming or who may hereafter claim under or
through Customer) under this Agreement, including any purchase
option or options provided for herein are hereby made subject and
subordinate to any leveraged lease, chattel mortgage, conditional
sale or other financing agreement heretofore or hereafter
established with respect to any of the cars including any
equipment trust agreement and to all rights of a trustee under
any such agreement. Any assignment, subcontract, or loan of cars
made by Customer pursuant to Article 12 of this Agreement shall
be expressly made subject to the above subordination. At the
request of GATX, the cars may be lettered or marked to identify
the legal owner of the cars at no expense to Customer. If during
the continuance of this Agreement, any such marking shall at any
time be removed or become illegible in whole or in part, Customer
shall immediately cause such marking to be restored or replaced
at GATX's expense.
(c) Miscellaneous. This Agreement, together with any and all
exhibits attached hereto, constitutes the entire agreement
between GATX and customer. This Agreement may not be amended,
altered, or changed except by written agreement signed by the
parties hereto. No waiver of any provision of this Agreement or
consent to any departure by Customer or GATX therefrom shall be
effective unless the same shall be in writing signed by both
parties and then such waiver or consent shall be effective only
in the specific instance and for the purpose for which given.
The headings that have been used herein are solely for
convenience and shall not be construed in any event or manner as
interpretive or limiting the interpretation of this Agreement.
The invalidity of any provision of this Agreement shall not
affect the remainder hereof, which shall in such event be
construed as if such invalid provision had not been inserted.
In the event the AAR Rules conflict with any provision of
this Agreement, the provision of this Agreement shall control
This Agreement shall be governed by and construed under the
laws of the State of Illinois.
17. Term. Unless otherwise terminated pursuant to this
Agreement, this Agreement shall remain in full force and effect
until the expiration of all Riders attached hereto. Customer's
obligations to GATX under this Agreement, however, shall remain
in full force and effect until the time all cars are returned to
GATX pursuant to Article 5 of this Agreement.
18. Notices. All notices hereunder shall be in writing and
shall be deemed delivered when mailed, postage prepaid, as
follows:
To Customer:
PETRO SOURCE CORPORATION
P. O. box 27
Salt Lake City, Utah Attention: Vice President
84110.
To GATX:
General American Transportation Corporation
120 s. Riverside Plaza
Chicago, IL 60606 Attention: Contract Administrator
IN WITNESS WHEREOF, the parties hereto have executed this
instrument as of the day and year first above mentioned.
ATTEST: GENERAL AMERICAN TRANSPORTATION CORPORATION
Karen De Long By: J.L.Moran
Assistant Secretary Senior Vice president
(Customer to affix
its corporate seal here)
ATTEST: PETRO SOURCE CORPORATION
__________________________________
____________________ By: William Howard
Secretary Vice President
Amendment No. 1 to Contract No. 8364
THIS AMENDMENT, made and entered into this 1st day of
November, 1994, by and between GENERAL AMERICAN TRANSPORTATION
CORPORATION , a New York corporation, ("GATX") and PETRO
SOURCE CORPORATION , A Utah corporation, ("Customer").
WHEREAS, GATX and Customer entered into Car Service contract
No. 8364 on December 10, 1987; and;
WHEREAS, GATX and Customer desire to amend the Car Service
Contract on the terms hereinafter set forth.
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL PROMISES SET
FORTH BELOW, THE PARTIES HERETO AGREE AS FOLLOWS:
A. The Car Cleaning contract appended to the Car Service
Contract is hereby deleted and the following inserted in its
place:
Car Cleaning Contract
Subject to the terms and conditions of this Car cleaning
Contract ("Contract"), GATX agrees that is will clean any car
furnished to Customer under the Car Service Contract at a GATX
car cleaning facility when such cleaning is necessary for repair
of such car by GATX under the Car Service Contract, and, at
GATX's discretion, upon return to GATX at the termination of the
Car Service contract.
The term "Waste Material" shall mean material removed from a
GATX car at a GATX designated car cleaning facility in accordance
with the terms of this Contract. Waste Material includes
material removed from a car and (I) disposed of by GATX as waste
or (ii) sold or recycled by GATX as reusable product.
1. Services. Subject to unavoidable delay, GATX shall collect,
contain, treat, handle, recycle or dispose of Waste Material as
described in the Waste Profile (as defined below) and the Uniform
Hazardous Waste Manifest issued by customer to GATX and accepted
by GATX. GATX shall have a car cleaned at a car cleaning
facility owned and operated by GATX. Upon agreement between GATX
and Customer the car may be cleaned at a facility owned and
operated by another party.
GATX retains the right to refuse to clean any car containing
any particular Waste Material. In such event, GATX shall notify
Customer and Customer shall have the car cleaned elsewhere.
2. Waste profile. Customer shall provide GATX with a written
physical and chemical description and an analysis (the
description and analysis are collectively the "Waste Profile") of
the Waste material to be handled by GATX hereunder. The Waste
Profile shall include approximate percentage concentrations of
the constituents of the Waste Material, shall list any known
unique chemical characteristics and shall describe the processes,
if known, which generated the Waste material that would be of
significance to the proper handling of the Waste Material. A
Material Safety Data sheet covering the Waste material or any
component thereof shall accompany the Waste Profile. The Waste
Profile shall be provided to GATX before GATX takes possession of
the Waste Material.
3. Non-conforming Waste.
A. Waste Material shall be deemed "Non-conforming" if:
a. Waste Material does not conform in any material respect to
the specifications, descriptions, analysis or limitations stated
in the Waste Profile; or
b. Waste Material contains components which are not
specifically identified in the Waste Profile ("Unidentified
Components"); and
i. the Unidentified Components increase the nature or extent of
the hazard or risk retention undertaken by GATX in handling or
disposing of the Waste material; or
ii. GATX's facility is not designed or permitted to handle,
store, recycle or dispose of the Waste Material containing the
unidentified Components.
B. If GATX determines that any Waste material delivered to GATX
by Customer is Non-Conforming, GATX shall notify Customer and the
parties shall arrange for satisfactory disposition of the Waste
Material by Customer. If the parties cannot reach such an
agreement, GATX may reject and return any Non-Conforming Waste
material to Customer by any means at Customer's cost.
4. Title. Title to the Waste material shall pass from customer
to GATX upon removal of the Waste Material from the car at a
cleaning facility owned and operated by GATX. Title to Non-
Conforming Waste Material shall revest in Customer upon
notification to Customer of GATX'' rejection of the Waste
Material pursuant to Section 3 B, above, unless GATX agrees in
writing to perform services with respect to such Non-Conforming
Waste material pursuant to the terms of this Contract and for a
price to be agreed.
5. GATX Warranties. GATX represents and warrants to Customer
that:
A. GATX understands the currently known environmental hazards
and risks involved in the handling of the Waste Materials which
are described on the Waste profiles.
B. Any disposal facility owned and operated by GATX used for
disposal of Waste Materials hereunder has or will have at the
time of disposal all permits, licenses, certificates or approvals
which are required by applicable laws.
C. Cleaning services performed at a cleaning facility owned and
operated by GATX shall be performed in accordance with the
standards prevailing in the tank car cleaning industry and shall
comply with all federal, state and local laws and regulations
applicable to such services.
6. Customer Warranties. Customer represents and warrants to
GATX that:
A. The description of the Waste Material on each Waste Profile
is true and correct in all material respects.
B. After designating the components of the Waste material on
each Waste Profile, Customer will not mix the Waste material with
other materials or otherwise cause the material alteration of the
characteristics or components of the Waste Material.
C. Any manifest or shipping document which Customer is required
by applicable laws to deliver to GATX at the time of tender of
the Waste Material shall be delivered in the form and number
required and shall be prepared in the manner and executed by
those persons specified in such laws.
7. Compensation. The costs for cleaning any car hereunder at a
cleaning facility owned and operated by GATX will be at the
prices currently established by GATX at the time of the cleaning.
If, upon agreement between GATX and Customer the car is cleaned
at a facility owned and operated by another party, the costs for
cleaning such car will be the prices charged by that facility for
its services.
8. Cars to be Empty. The base prices for cleaning cars
hereunder at a facility owned and operated by GATX is based on
the assumption that the car to be cleaned is "empty" (containing
less than one (1) inch of residue at the deepest point in the car
or one atmosphere of pressure). If any car is received by GATX
not in an empty condition, either (i) the car will be returned to
Customer at its expense and all service charges under the Car
Service Agreement will continue, or (ii) Customer and GATX will
agree upon the price for cleaning that car.
9. Prohibited Commodities. GATX shall notify Customer from
time to time of those materials which Customer is prohibited from
sending to any GATX designated facility at any time or to any
disposition point at the expiration or termination of the Car
Service Contract. Any car containing any such materials shall be
cleaned of commodities by Customer prior to the forwarding or
movement of such car to any such point. If not so cleaned, such
car shall be returned to Customer at its expense for cleaning and
all service charges under the Car Service Contract shall continue
until such car is returned to GATX cleaned of commodities.
10. GATX Indemnity. GATX shall indemnify, defend and hold
Customer harmless from and against costs, claims, expenses and
causes of action brought against or paid or incurred by Customer
arising out of the handling, storage, transportation or disposal
of Waste Material title to which has passed to GATX pursuant to
this Contract.
11. Customer Indemnity. Customer shall indemnify, defend and
hold GATX harmless from and against costs, claims, expenses and
causes of action brought against or paid or incurred by GATX
arising out of any error or omission in the Waste Profile or
Uniform Hazardous Waste Manifest issued by Customer to GATX
pursuant to this Contract.
12. Miscellaneous. This Contract is subject to all the terms
and conditions of the Car Service Contract.
B. Article 8 of the Car Service Contract is hereby amended by
deleting the first sentence thereof.
C. Article 11 of the Car Service Contract is hereby amended to
read as follows:
a. Except as otherwise provided in Article 4 of this
Agreement, Customer shall indemnify and save harmless GATX
from and against all claims made against GATX or which GATX
may incur arising out of Customer's failure to comply with
the terms and conditions of this Agreement, except to the
extent such claim is a claim for which a railroad(s) is
responsible and has satisfied such responsibility; and,
provided, that to the extent any negligence on the part of
GATX is a legal cause of such claim, Customer's obligations
to indemnify and hold GATX harmless shall be reduced by an
amount which corresponds to the extent of GATX's negligence.
b. All indemnities contained in this Agreement shall
survive the termination of this Agreement, howsoever the
same shall occur.
D. The first sentence of Article 12 of the Car Service Contract
is hereby amended to read as follows:
THE CARS SHALL BE USED EXCLUSIVELY IN THE SERVICE OF
CUSTOMER, AND CUSTOMER SHALL NOT FURNISH, ASSIGN OR
SUBCONTRACT ANY CAR, OR MAKE ANY TRANSFER OR ASSIGNMENT OF
THIS AGREEMENT, WITHOUT GATX'S PRIOR WRITTEN CONSENT, except
that Customer may furnish any car for single trips to its
customers or to its suppliers in accordance with the
provisions of demurrage tariffs lawfully in effect, and
provided that Customer shall remain liable to GATX for the
fulfillment of all obligations under this Agreement.
E. The last sentence of Article 15 of the Car Service Contract
is hereby amended to read as follows:
IN NO EVENT SHALL EITHER PARTY HAVE ANY LIABILITY TO THE
OTHER FOR CONSEQUENTIAL OR INCIDENTAL DAMAGE, WHETHER IN
CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE.
F. The last sentence of Article 17 is hereby amended to read as
follows:
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE
LAWS OF THE STATE OF ILLINOIS.
GENERAL AMERICAN TRANSPORTATION CORPORATION
By: ____________________
General Manager
PETRO SOURCE CORPORATION
By: _________________________________________________
Title
Amendment No. 2 to Contract No. 8364
Gentlemen:
Please reference the Car Service Contract dated December 10,
1987, by and between GENERAL AMERICAN TRANSPORTATION CORPORATION
("GATX") AND PETRO SOURCE CORPORATION ("PETRO") which contract is
hereinafter referred to as the "Contract".
WHEREAS, CROWN ASPHALT PRODUCTS COMPANY ("CROWN") has assumed
effective July 1, 1998, all responsibilities, continuing
obligations, and future business of PETRO;
WHEREAS, PETRO has assigned the Contract to CROWN pursuant to the
aforesaid assumption, subject to the consent of GATX.
NOW, THEREFORE, the parties hereto agree as follows:
FIRST: GATX hereby consents to the assignment by PETRO of its
rights and interests under the Contract to CROWN.
SECOND: CROWN agrees to and hereby does accept the assignment
and expressly assumes and agrees to pay all of PETRO's debts,
obligations, liabilities, charges and indemnities under the
Contract. CROWN further assumes and agrees to perform each and
every duty and obligation to be performed by PETRO under the
Contract in accordance with the terms thereof.
THIRD: This letter, when signed by GATX and confirmed by CROWN,
shall constitute an amendment to the Contract effective July 1,
1998. PETRO and CROWN agree that car service invoicing and
credits for mileage earnings will be issued by GATX to CROWN
effective as of October 1, 1998. Any adjustments thereto for
this period after the effective date hereof and October 1, 1998
shall be made between PETRO and CROWN.
Very truly yours,
GENERAL AMERICAN TRANSPORTATION
CORPORATION
By:___________________________________________
Manager of Fleet Portfolio & Pricing
CROWN ASPHALT PRODUCTS COMPANY
BY: __________________________________
Title
3
FIRST AMENDMENT TO LEASE
This First Amendment to Lease ("Amendment") is made as of this
16th day of September, 1996, by and between the Parkside Salt
Lake Corporation, a Delaware corporation ("Landlord") and Crown
Energy Corporation, a Utah corporation ("Tenant") with reference
to the following facts and circumstances:
A. Landlord is the Owner of that certain building located at
215 S. State Street, Salt Lake City, Utah ("Property");
B. Landlord's predecessor in interest, State of California
Public Employees' Retirement System, and Tenant entered into a
certain Lease Agreement ("Lease") dated August 20, 1993.
C. American Realty Advisors ("Advisor") is the real estate
investment manager to the Landlord.
D. Landlord and Tenant desire to amend the Lease upon terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing facts and
circumstances, the mutual covenants and promises contained herein
and other good and valuable consideration, the receipt and legal
sufficiency of which is acknowledged by each of the parities, the
parties do hereby agree to the following:
1. Definitions. Each capitalized term used in this Amendment
shall have the same meaning as is ascribed to such capitalized
term in the Lease, unless otherwise provided for herein.
2. Expiration Date. The expiration date of the Lease shall be
extended to September 30, 2001.
3. Basic Annual Rent. Effective October 1, 1996, Basic Annual
Rent, pursuant to Article 3 of the Basic Lease Provisions, shall
increase as follows:
Basic Annual Rent Monthly Rent
October 1, 1996 -
September 30, 1997 $32,011.70 $2,667.64
October 1, 1997 -
September 30, 1998 $34,314.70 $2,859.56
October 1, 1998 -
September 30, 1999 $36,617.70 $3,051.48
October 1, 1999 -
September 30, 2000 $38,920.70 $3,243.39
October 1, 2000 -
September 30, 2001 $41,223.70 $3,435.31
4. Tenant Improvements to Premises. Landlord shall provide
Tenant with an improvement allowance of $3.00 per usable square
foot or $5,955.00 (the "Improvement Allowance") for the purposes
of constructing and installing Tenant's improvements pursuant to
working plans and drawings approved by Landlord. Said Improvement
Allowance shall include the cost of space planning and working
drawings. All costs incurred to improve the Premises, above and
beyond the Improvement Allowance shall be the Tenant's sole
responsibility. The Landlord's construction obligations are
further clarified in the Work Letter attached hereto as Exhibit
A.
5. Broker. Tenant represents to Landlord that Tenant has not
dealt with any real estate broker, salesperson or finder in
connection with this Amendment, and no other such person
initiated or participated in the negotiation of this Amendment or
is entitled to any commission in connection herewith. Tenant
hereby agrees to indemnify, defend and hold Landlord, its
property manager and their respective employees harmless from and
against any and all liabilities, claims, demands, actions,
damages, costs and expenses (including attorney's fees) arising
from either (a) a claim for a fee or commission made by any
broker claiming to have acted by or on behalf of Tenant in
connection with this Amendment, or (b) a claim of, or right to
lien under the statutes of Utah relating to real estate broker
liens with respect to any such broker retained by Tenant.
6. Binding. The Lease, as amended hereby, shall continue in
full force and effect, subject to the terms and provisions
thereof and hereof. In the event of any conflict between the
terms of the Lease and the terms of this Amendment, the terms of
this Amendment shall control. This Amendment shall be binding
upon and inure to the benefit of Landlord, Tenant and their
respective successors and permitted assigns.
7. Submission. Submission of this Amendment by Landlord to
Tenant for examination and/or execution shall not in any manner
bind Landlord and no obligations on Landlord shall arise under
this Amendment unless and until this Amendment is fully signed
and delivered by Landlord and Tenant; provided, however, the
execution and delivery by Tenant of this Amendment to Landlord
shall constitute an irrevocable offer by Tenant to lease the
Premises on the terms and conditions herein contained, which
offer may not be revoked for thirty (30) days after such
delivery.
8. Limit of Liability. Neither Landlord nor any principal of
Landlord nor any owner of the Property, whether disclosed or
undisclosed, shall have any personal liability with respect to
any of the provisions of the Lease, as hereby amended, and if
Landlord is in breach or default with respect to Landlord's
obligations under the Lease, as hereby amended, or otherwise,
Tenant shall look solely to the equity interest of Landlord in
the Property for the satisfaction of Tenant's remedies or
judgments.
9. Address for Payments and Notices. Article 12 of the Basic
Lease Provisions is hereby amended to provide that any notices to
Landlord shall be addressed to Landlord as designated below in
item (a), with a copy to Wallace Associates ("Building Manager")
at the address designated below in item (b).
(a) Parkside Salt Lake Corporation
c/o American Realty Advisors
700 North Brand Boulevard, Suite 300
Glendale, CA 91205
Attn.: Stanley Iezman
(b) Wallace Associates
Steve Koch, Building Manager
215 S. State Street, Suite 960
Salt Lake City, UT 84111
10. Miscellaneous
10.1. Attorneys' and Other Fees. Should either party
institute any action or proceeding to enforce or interpret this
Amendment or any provision hereof, for damages by reason of any
alleged breach of this Amendment or of any provision hereof, or
for a declaration of rights hereunder, the prevailing party in
any such action or proceeding shall be entitled to receive from
the other party all costs and expenses, including actual
attorneys' and other fees, reasonably incurred in good faith by
the prevailing party in connection with such action or
proceeding. The term "attorneys' and other fees" shall mean and
include attorneys' fees, accountants' fees, and any and all
consultants and other similar fees incurred in connection with
the action or proceeding and preparations therefor. The term
"action or proceeding" shall mean and include actions,
proceedings, suits, arbitrations, appeals and other similar
proceedings.
10.2. TIME OF ESSENCE. TIME IS OF THE ESSENCE OF THIS
AMENDMENT AND EACH AND EVERY TERM AND PROVISION HEREOF.
10.3. Modification. A modification of any provision herein
contained, or any other amendment to this Amendment, shall be
effective only if the modification or amendment is in writing and
signed by both Lessor and Lessee.
10.4. Waiver. No waiver by any party hereto of any breach or
default shall be considered to be a waiver of any other breach or
default. The waiver of any condition shall not constitute a
waiver of any breach or default with respect to any covenant,
representation or warranty.
10.5. Successors and Assigns. This Amendment shall inure to
the benefit of, and be binding upon, the parties hereto and their
respective heirs, successors and assigns.
10.6. Number and Gender. As used in this Amendment, the
neuter includes the masculine and feminine, and the singular
includes the plural.
10.7. Governing Law. This Amendment shall be governed by,
interpreted under, and construed and enforced in accordance with
the laws of the State of Utah applicable to agreements made and
to be performed wholly within the State of Utah.
10.8. Construction. Headings at the beginning of each
Section and subsection are solely for the convenience of the
parties and are not a part of this Amendment. Except as otherwise
provided in this Amendment, all exhibits referred to herein are
attached hereto and are incorporated herein by this reference.
Unless otherwise indicated, all references herein to Articles,
Sections, subsections, paragraphs, subparagraphs or provisions
are to those in this Amendment. Any reference to a Section herein
includes all subsections thereof. This Amendment shall not be
construed as if it had been prepared by only Lessor or Lessee,
but rather as if both Lessor and Lessee had prepared the same. In
the event any portion of this Amendment shall be declared by any
court of competent jurisdiction to be invalid, illegal or
unenforceable, such portion shall be deemed severed from this
Amendment, and the remaining parts hereof shall remain in full
force and effect, as fully as though such invalid, illegal or
unenforceable portion had never been part of this Amendment.
10.9. Integration of Other Agreements. This Amendment sets
forth the entire agreement and understanding of the parties with
respect to the matters set forth herein and supersedes all
previous written or oral understandings, agreements, contracts,
correspondence and documentation with respect thereto. Any oral
representations or modifications concerning this Amendment shall
be of no force or effect.
10.10. Indemnification by Lessee. Lessee agrees to indemnify,
defend and hold Lessor free and harmless of, from and against any
and all claims, demands, damages, losses, liabilities, causes of
action, costs or expenses (including reasonable attorneys' fees),
directly or indirectly arising in connection with the breach of
any covenant, agreement, representation or warranty of Lessee
under the terms of this Amendment.
10.11. Duplicate Originals; Counterparts. This Amendment may
be executed in any number of duplicate originals, all of which
shall be of equal legal force and effect. Additionally, this
Amendment may be executed in counterparts, but shall become
effective only after a counterpart hereof has been executed by
each party; all said counterparts shall, when taken together,
shall constitute the entire single Amendment between the parties.
10.12. Non-Waiver of Rights. No failure or delay of either
party in the exercise of any right given to such party hereunder
shall constitute a waiver thereof unless the time specified
herein for exercise of such right has expired, nor shall any
single or partial exercise of any right preclude other or further
exercise thereof or of any other right.
10.13. Days. The term "days," as used herein, shall mean
actual days occurring, including Saturdays, Sundays and holidays.
The term "business days" shall mean days other than Saturdays,
Sundays and holidays. If any item must be accomplished or
delivered hereunder on a day that is not a business day, it shall
be deemed to have been timely accomplished or delivered if
accomplished or delivered on the next following business day.
10.14. Further Assurances. Lessor and Lessee each agree to
execute any and all other documents and to take any further
actions reasonably necessary to consummate the transactions
contemplated hereby.
10.15. Joint and Several Liability. If Lessee consists of two
(2) or more parties, each of such parties (and each of Lessee's
general partners) shall be liable for Lessee's obligations under
this amendment, and all documents executed in connection
herewith, and the liability of such parties shall be joint and
several. Additionally, the obligations and liabilities hereunder
of the general partners or other appropriate persons or entities
that comprise Lessee, if any, are and shall be joint and several.
10.16. No third party Beneficiaries. Except as otherwise
provided herein, no person or entity shall be deemed to be a
third party beneficiary hereof, and nothing in this Amendment
(either expressed or implied) is intended to confer upon any
person or entity, other than Lessor and/or lessee (and their
respective nominees, successors and assigns), any rights,
remedies, obligations or liabilities under or by reason of this
Amendment.
11. Full force and Effect. All other terms and conditions of
the Lease shall remain unchanged and in full force and effect.
IN WITNESS WHEREOF, this Amendment is executed as of the day and
year first written above.
LANDLORD: TENANT:
PARKSIDE SALT LAKE CORPORATION CROWN ENERGY CORPORATION,
A Utah corporation
By: Glenn H. Girsberger, By: Jeff Mealey
Asset Manager
Its: President
Date: 10/10/96 Date: 10/1/96
